Introduction
Securities and Exchange board of India (SEBI) had amended the Infrastructure Investment Trust Regulations 2014 (InvIT regulations) through an amendment notification dated 17th April 2026. Through this amendment, SEBI had clarified that the Special Purpose Vehicles (SPV) with expired or terminated concession agreements would also be considered as SPVs subject to certain conditions. However, the said conditions were not specified in the said amendment notification.
Hence SEBI has now come out with the said conditions through a separate circular dated 15th May 2026. This circular prescribes 2 conditions for treating companies/LLP with expired concession agreement as SPV. In this article we shall understand these conditions and implications thereof.
Conditions prescribed under circular
Through amendment dated 17th April 2026, a proviso was inserted in the definition of SPV prescribed under reg 2(1)(zy) of InvIT regulations. As per this proviso, a SPV who has no infrastructure project due to termination or expiry of concession agreement can also be treated as SPV subject to certain conditions specified by SEBI.
The SEBI has specified following 2 conditions through circular dated 15th May 2026.
1. “The Investment Manager shall either exit investment in such SPV by way of sale / liquidation / winding-up / merger of such SPV, or acquire any new infrastructure project in such SPV, within one year from –
(a) completion/termination of concession agreement or such other agreement of similar nature, or
(b) conclusion of all pending claims/litigations/tax assessments and related appeals, or
(c) completion of defect liability period,
whichever is later.”
AND
2. “Till the time investment in such SPV is held by the InvIT, adequate disclosures shall be made in the annual report of the InvIT including the following –
(a) InvIT Level: The Investment Manager shall disclose a detailed breakup of the value of investments (gross and net basis) in the SPV(s) wherein the concession agreement or such other agreement of similar nature has ended/terminated.
(b) SPV Level: The Investment Manager shall provide additional disclosures pertaining to each SPV wherein the concession agreement or such other agreement of similar nature has ended/terminated, which shall include the following information:
(1) Brief details of the project, date when such agreement ended and status of vesting certificate or any other document issued by the concessioning authority upon successful completion of handover of the project to the said authority.
(2) Assets and Liabilities of the SPV (including specific reserves, if any): Provide the nature and amount of respective carrying value of assets and liabilities (including specific reserves, if any) on broad/grouped basis as determined in the annual audited financial statements of the SPV.
(3) Contingent Liabilities: Details of Contingent Liabilities of the SPV as set out in its annual audited financial statements.
(4) Debt Repayment: Brief details of outstanding debt of the SPV, if any, along with repayment schedule.
(5) Whether SPV has sufficient assets to meet its liabilities (including contingent liabilities). If not, how such liabilities are planned to be met.
(6) Exit Strategy and Timeline: A clear plan of action detailing how and when the InvIT intends to exit its investment in the SPV or plans to acquire new infrastructure project, along with the brief details of steps taken so far and expected timeline for completion.
(7) Other Material Details: Other material details related to such SPV including details related to pending claims, pending litigations, pending assessments, pending statutory/contractual obligations, balance period of defect liability period, etc.”
Analysis of conditions
The first condition aims at solving the practical difficulty faced by InvITs in immediately exiting the investment in SPV due to pending claims, litigations, and other such matters. This condition prescribes a timeline within which the investment must be exited post settlement of all such contingent matters. Also, the condition provides multiple options for exiting investment and the circular also clarifies that the time taken in obtaining regulatory approvals in mergers/winding up/liquidation etc. would not be counted in the period of one year.
Second condition provides a mechanism to ensure transparency through appropriate reporting to unit holders about the financial impact of holding investment in SPV with expired concession agreement and the exit plan for withdrawing such investment. This condition aims to ensure investor protection in the backdrop of practical changes made to bring ease of doing business.
Points to be considered
As per the second condition, the InvITs have to give detailed information relating to SPV with expired concession agreement in the annual report of InvIT. Since the circular is effective immediately, this information needs to be given in the annual report of Financial Year (FY) 2026 which is now in the process of finalization.
As per regulation 23 of InvIT regulations, the annual report must be submitted till 30th June. Now we are already standing in the month of May. Hence InvITs are in the process of finalizing their reports. In such a situation, if any InvIT has investment in any such SPV whose concession agreement has expired, it will have to first collate all the information listed in the circular and then will have to include the same in the annual report. Considering the shortage of time due to approaching last date, this may prove to be a tedious task. Also, the InvITs through their investment managers will have to finalize an exit plan with specified timelines as it has to be disclosed in the annual report as per the circular.
Conclusion
The conditions prescribed by SEBI through the circular are not a total surprise, as they were already proposed through consultation paper dated 5th February 2026, which proposed amendments to Invit regulations. Further, considering the ease of functioning this amendment and the subsequent circular is expected to bring, there should not arise any difficulty in its compliance.