Institutional investors such as pension funds, sovereign wealth funds, and domestic mutual funds will not invest unless they are confident that cash flows cannot be siphoned via opaque management fees, inflated sponsor asset acquisitions, or unmonitored related-party transactions.
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Governance readiness is critical because an InvIT operates under fiduciary trust principles where assets are held for the exclusive benefit of unitholders, rather than for the promoter's discretion. The governance framework is split across the Trustee, the Investment Manager, and the unitholders.
The Investment Manager must have an independent board (at least 50% independent directors under SEBI guidelines for public InvITs), independent audit and nomination committees, and a dedicated Investment Committee to evaluate asset acquisitions.
Furthermore, related-party transactions (such as project management contracts or future asset acquisitions from the sponsor) are strictly governed, requiring independent valuations, fairness opinions, and majority or supermajority approval of non-interested unitholders.
Institutional investors such as pension funds, sovereign wealth funds, and domestic mutual funds will not invest unless they are confident that cash flows cannot be siphoned via opaque management fees, inflated sponsor asset acquisitions, or unmonitored related-party transactions.
Selecting credible, respected independent directors with domain expertise in infrastructure, capital markets, and corporate law.
Drafting transparent protocols for pricing and approving ongoing O&M and EPC contracts between the InvIT and the sponsor.
Identify the exact approval provision, voting denominator and excluded votes. The October 2026 amendment uses at least 75% of votes cast for specified Regulation 22 approvals, not every InvIT decision.
Establishing institutional risk management, audit trails, and SEBI compliance mechanisms within the Investment Manager.
Promoters used to running private companies often find InvIT governance demanding. The day you launch an InvIT, you are no longer the unilateral owner of those assets; you are a fiduciary managing institutional capital under continuous regulatory and public market scrutiny.
NorthAxis Advisory supports sponsors, developers and asset owners in assessing InvIT viability, structuring HoldCo/SPV assets, financial modelling and preparing for institutional investor due diligence. All regulated intermediary roles are performed by registered SEBI intermediaries.