Capital markets regulator Sebi on Monday cancelled the registration of five alternative investment funds (AIFs) for repeatedly failing to submit mandatory quarterly activity reports.
In separate orders, Sebi cancelled the registrations of Exponential Innovation Fund, Florintree India Flexi Advantage Trust, Prime Realty Capital, Rudrabhishek Infrastructure Trust and Victory Investment Fund with immediate effect, PTI reported.
Created with AI. Errors are possibleThe regulator said these entities failed to file Quarterly Activity Reports (QARs) for the quarters ended March, June, September and December, 2025, despite regulatory requirements mandating specific disclosures by registered AIFs.
According to existing rules, all AIFs are required to submit quarterly reports within 15 days from the end of every quarter through Sebi’s Intermediary Portal.
Following the lapses, Sebi initiated summary proceedings under the Intermediaries Regulations and issued show-cause notices to these entities in April 2026, according to PTI.
Observing that the violations were established and the entities had failed to comply with reporting norms, Sebi held that cancellation of registration was warranted under the applicable rules.
Sebi mulls allowing InvITs to add major road expenses back into NDCF calculation
In a separate development, Sebi proposed allowing InvITs to add payments made for major maintenance of road projects back into Net Distributable Cash Flow (NDCF) computation, capped at the amount funded by external debt.
This mechanism should apply only to the ‘Roads and Bridges’ sector and requires strict unitholder approval. The proposal came after the SEBI received representation from the Bharat InvITs Association (BIA) regarding the treatment of debt availed by InvITs for incurring major maintenance expenses of road projects while calculating the NDCF.
The industry association highlighted that although major maintenance (MM) expenses extend the road’s life and enhance its quality, they cannot be capitalised under generally accepted accounting principles because they do not generate future economic benefits, such as extended concession periods or increased toll revenue, as per PTI.
Since InvITs (infrastructure investment trusts) holding road projects cannot capitalise these MM expenses under the current NDCF framework, any MM expense incurred by availing debt is mandatorily reduced from the operational cash flow, which decreases the NDCF, the industry body added.
Accordingly, in its consultation paper, Sebi proposed that “payments made for the purpose of MM expense for the Road Projects of InvITs to the extent funded by external debt will be allowed to be factored (added back) for the purpose of the NDCF computation”.
Regarding unitholders’ nod, Sebi suggested approval from unitholders shall be required where votes cast in favour of the resolution should be at least 60 per cent of total votes cast, before adding back payments made for major maintenance expenses for road projects to the extent funded by external borrowing.
Approval can be obtained on a one-time basis covering the entire project life cycle or for specific MM expenses, but any deviation requiring additional debt necessitates prior unitholder approval.
When seeking unitholder approval, the explanatory statement accompanying the notice for the unitholding meeting should disclose the names and details of the projects/SPVs (Special Purpose Vehicles)/ Holdcos (Holding companies) for which the MM debt is proposed or has already been raised, Sebi suggested.
“The payment of major maintenance expenses, which is funded by external borrowing, as certified by the statutory auditor of the InvIT, will be allowed to be added back for the purpose of NDCF calculation,” Sebi said.
Earlier, Sebi prescribed a standardized framework for the calculation of NDCF for InvITs, which prohibited using borrowed money for distributions to unitholders. Sebi has sought public comments till June 22 on the proposal. (With Agency Inputs)
