SEBI Amends InvIT Regulations to Permit Depository Receipts and Overhaul Voting Thresholds — October 26, 2026

In a bid to broaden capital access and enhance trust governance, the Securities and Exchange Board of India (SEBI) has notified the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Second Amendment) Regulations, 2026. The notification, issued under Notification No. SEBI/LAD-DOP/2026/327, amends the foundational 2014 regulatory framework governing Infrastructure Investment Trusts (InvITs).

The regulatory overhaul introduces three structural changes: facilitating cross-border investment access via Depository Receipts (DRs), shifting voting thresholds from asset value to actual votes cast, and introducing mandatory exit mechanisms for minority unitholders when a co-sponsor exits.

Depository Receipts on InvIT Units

A primary highlight of the amendment is the insertion of Regulation 14(5C), which explicitly allows InvITs to issue Depository Receipts against their underlying units. Previously, Indian InvITs were constrained in tapping global retail and institutional pools through depository instruments due to regulatory ambiguity. Under the new sub-regulation, trusts can issue DRs in overseas jurisdictions in accordance with SEBI’s specified guidelines.

This move provides listed Indian trusts—such as those operating in highways, power transmission, and renewable energy—an avenue to attract long-term global pension funds and international investors without necessitating direct domestic market accounts.

Recalibrated Voting Thresholds Under Regulation 22

The amendment addresses longstanding operational bottlenecks related to unitholder voting. Previously, key trust resolutions required approval from at least 75% of unitholders measured by total unit value. This created high friction in passing ordinary and special trust business if unitholder turnout was subdued.

Under the revised Regulation 22(5A), the approval benchmark has been recalibrated:

• Special resolutions will now require approval where at least 75% of the total votes cast are in favour of the resolution.
• Votes cast by parties related to the transaction continue to be excluded to eliminate conflict of interest.

By shifting the benchmark from total outstanding ownership value to active voting participation, the regulator has brought trust governance closer to the operational standards seen under the Indian Companies Act.

Exit Option for Dissenting Unitholders

To ensure minority unitholders are not disadvantaged during corporate restructuring, SEBI introduced a dedicated investor safeguard in Regulation 22. In InvITs supported by multiple sponsors, the exit of any sponsor previously left dissenting unitholders with limited liquidity options if they opposed the ownership change.

The amended provisions mandate that:

• When a sponsor departs from an InvIT with multiple sponsors, the outgoing sponsor, its group entities, or the continuing sponsor group must provide dissenting unitholders an option to exit.
• The exit must be facilitated through a buyback of units in the manner and pricing specified by SEBI.

These collective amendments mark another step by SEBI to mature the Indian yield-instrument market, balancing easier global capital flows for sponsors with safeguards for unitholders.