Review of - (a) disclosure of financial information in offer document, and (b) continuous disclosures and compliances by Real Estate Investment Trusts (REITs)
Summary
This circular revises Chapter 3 and Chapter 4 of the Master Circular for REITs regarding financial disclosures and continuous compliances. It substitutes Paragraph 7 of Annexures 5 and 6 to update financial statement disclosure requirements in offer documents. The revised provisions apply immediately, with specific Chapter 4 requirements effective from April 01, 2025. Section 3.2.3 mandates certified proforma financial statements for follow-on offers involving material asset changes. Section 3.3 establishes that financial information must adhere to Indian Accounting Standards and specifies required statements like the Balance Sheet and Cash Flows. Sections 3.4.1 through 3.4.4 require additional audited disclosures including project-wise cash flows, contingent liabilities, commitments, and related party transactions. This section mandates specific disclosures for related party transactions, capitalization statements, debt payment history, and fair value statements. It establishes audit requirements for financial information, including auditor qualifications and reporting obligations. Additionally, it requires the inclusion of projected revenues and operating cash flows in the offer
Text
Chapter 3 and Chapter 4 of the Master Circular shall stand revised and the revised chapters are placed at Annexure – A.
Paragraph 7 of Annexure – 5 of the Master Circular shall be substituted with the following: “7. Financials: a) Disclosure as per clauses 11(a) to 11(c) and 11(e) of the Schedule III of the REIT Regulations: Provided that if the REIT has undertaken any acquisition or divestment of any material assets after the latest period for which the financial information is disclosed in the placement document but before the date of filing of the placement document, the certified proforma financial statements shall be disclosed for at least the period covering last completed financial year and the stub period, if any. The preparation and certification of proforma financial statements shall be as provided in Section ‘(H)’ of Chapter 3 of this master circular. b) Disclosure as per clause (a) above may be incorporated by reference to any public disclosures of financials made under the REIT Regulations or any circular issued thereunder, along with link(s) to such disclosure(s) wherever available, including on the website of the REIT and the stock exchanges. c) Summary of the audited financial statements of the assets proposed to be acquired for the previous three years and the stub period (if available). Provided that in cases where the general purpose financial statement of the assets being acquired are not available, combined / carved-out financial statements for those assets shall be prepared in accordance with Guidance Note issued by the ICAI from time to time. The combined / carved-out fi
Paragraph 7 of Annexure – 6 of the Master Circular shall be substituted with the following: “7. Financials: a) Disclosure as per clauses 11(a) to 11(c) and 11(e) of the Schedule III of the REIT Regulations: Provided if the REIT has undertaken any acquisition or divestment of any material asset(s) after the latest period for which financial information is disclosed in the letter of offer but before the date of filing of the letter of offer, the certified proforma financial statements shall be disclosed for at least the period covering last completed financial year and the stub period, if any. The preparation and certification of proforma financial statements shall be as provided in Section ‘(H)’ of Chapter 3 of this master circular. b) Disclosure as per clause (a) above may be incorporated by reference to any public disclosures of financials made under the REIT Regulations or any circular issued thereunder, along with link(s) to such disclosure(s) wherever available, including on the website of the REIT and the stock exchanges. c) Summary of audited financial statements of the assets being acquired for the previous three years and the stub period (if available). Provided that in cases where the general purpose financial statement of the assets being acquired are not available, combined / carved-out financial statements for those assets shall be prepared in accordance with Guidance Note issued by the ICAI from time to time. The combined / carved-out financial statements shall b
This circular shall be applicable with immediate effect except for the requirements specified under Chapter 4 which shall be applicable for disclosure of financial information for the period beginning on or after April 01, 2025.
This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with the provisions of Regulations 15(2)(d), 23(7) and 33 of the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014, to protect the interests of investors in securities market and to promote the development of, and to regulate the securities market.
The recognized Stock Exchanges and Indian REITs Association are advised to disseminate the contents of this Circular on their website.
The offer document shall contain audited financial statements for a period of three financial years and stub period (if applicable).
The audited stub period financial statements shall be disclosed, if financial statements for latest completed financial year included in the offer document is older than six months from the date of filing of the offer document. The stub period should not end up to a date earlier than six months from the date of filing of the offer document.
In case of a follow-on offer, if the REIT has been in existence for a period lesser than the last three completed financial years, then financial statements of the REIT shall be disclosed for such financial years for which the REIT has been in existence and for the stub period (if applicable).
In case of an initial offer, audited combined financial statements of the REIT shall be disclosed in the offer document.
In case of a follow-on offer, audited consolidated financial statements of the REIT shall be disclosed in the offer document. The separate audited financial statements of the REIT shall be disclosed on the REIT’s website and the link to REIT’s separate financial statements shall be specified in the offer document.
In case of a follow-on offer, if the REIT has undertaken any acquisition or divestment of any material assets after the latest period for which the financial information is disclosed in the offer document but before the date of filing of the offer document, the certified proforma financial statements of the REIT shall be disclosed for at least the period covering last completed financial year and the stub period, if any.
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Source: SecMarx — Review of - (a) disclosure of financial information in offer document, and (b) continuous disclosures and compliances by Real Estate Investment Trusts (REITs). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.