SEBI Clarifies Status of InvIT SPVs Post Expiry or Termination of Concession Agreements

The Securities and Exchange Board of India (SEBI), vide Circular bearing reference no. SEBI/HO/DDHS/DDHS-PoD-2/I/11698/2026 dated May 15, 2026 (the “Circular”), has issued an important clarification concerning the status and treatment of Special Purpose Vehicles (SPVs) held by Infrastructure Investment Trusts (InvITs) upon the expiry or termination of concession agreements. The Circular operationalises the amendment introduced to Regulation 2(1)(zy)(ii) of the SEBI (Infrastructure Investment Trusts) Regulations, 2014 on April 17, 2026, and establishes the framework governing the continued classification, management and disclosure obligations relating to such SPVs.

Prior to the amendment, the expiry or termination of a concession agreement created uncertainty regarding whether such entities could continue to qualify as SPVs under the InvIT framework. The Circular addresses this regulatory gap by clarifying that the conclusion or termination of the concession agreement shall not, by itself, affect the status of the entity as an SPV, subject to compliance with the conditions prescribed by SEBI.

A central feature of the Circular is the introduction of a defined transition framework for Investment Managers. SEBI has mandated that the Investment Manager must either:

• exit the investment in such SPV through sale, liquidation, winding-up or merger; or
• acquire a new infrastructure project within such SPV, within one year from the later of the following:
  • completion or termination of the concession agreement or similar arrangement;
  • conclusion of pending claims, litigations, tax assessments and related appeals; or
  • completion of the defect liability period.

The Circular further clarifies that the time taken in obtaining statutory or regulatory approvals for effecting the sale, liquidation, winding-up or merger of the SPV shall stand excluded while computing the prescribed one-year timeline.

In addition to prescribing a transition mechanism, the Circular also introduces enhanced disclosure obligations to be made in the annual report of the InvIT for so long as such SPV continues to remain within the InvIT structure:

1. At the InvIT level, the Investment Manager is required to disclose a detailed breakup of the gross and net value of investments in SPVs where the concession agreement or similar arrangement has expired or been terminated.
2. At the SPV level, the Circular prescribes an extensive disclosure framework requiring the Investment Manager to provide project-specific information, including
   • brief details of the project, the date of expiry or termination of the agreement and the status of handover or vesting documentation issued by the concessioning authority;
   • carrying value of assets and liabilities, including specific reserves reflected in the audited financial statements;
   • details of contingent liabilities;
   • outstanding debt and repayment schedules of the SPV;
   • assessment of whether the SPV possesses adequate assets to meet its liabilities and contingent liabilities;
   • the proposed exit strategy or acquisition plan for new infrastructure project together with implementation timelines; and
   • details relating to pending claims, litigation, assessments, statutory obligations and defect liability obligations.

The Circular establishes a framework for the continued classification, management and disclosure of SPVs following the conclusion or termination of concession agreements. By prescribing time-bound requirements relating to exit or project acquisition and introducing detailed disclosure obligations, the Circular provides greater clarity regarding the treatment of such SPVs within the InvIT framework.