Finin2minCompanies Act Professional Series

SC06 - Schedule VI - Infrastructure Projects and Facilities

A complete classification and decision guide for the infrastructure categories used by section 55 long-tenure preference shares and the section 186 infrastructure-provider exemption.

10 Heads
Transportation through residual prescribed services

2 Legal Uses
Sections 55 and 186

30-Year Maximum
Infrastructure preference-share tenure

10% Annual Minimum
From year 21 under Rule 10

Executive snapshot

Why this short Schedule matters

Security structuring

Section 55 allows preference shares beyond the ordinary 20-year ceiling for qualifying infrastructure projects, subject to Rule 10.

Inter-corporate finance

Section 186(11) contains a separate exemption for a company established with the object of and engaged in providing infrastructural facilities.

Classification evidence

The project, the company's constitutional objects and its actual business must be separately documented.

Core distinction: Schedule VI defines projects and facilities. It does not, by itself, prove that a company qualifies for every infrastructure-related exception.

Statutory map

Ten infrastructure categories

Complete register

Category-by-category statutory framework

Head	Projects and activities included	Practical illustrations
1. Transportation, including inter-modal transportation	Roads, national highways, state highways, major district roads, other district roads and village roads, including toll roads, bridges, highways, road transport providers and other road-related services Rail systems, rail transport providers, metro rail roads and other railway-related services Ports, including minor ports and harbours, inland waterways, coastal shipping, shipping lines and other port-related services Aviation, including airports, heliports, airlines and other airport-related services Logistics services	Toll-road SPV, metro operator, inland-waterway terminal, airport operator, integrated logistics network.
2. Agriculture	Infrastructure related to storage facilities Construction relating to projects involving agro-processing and supply of inputs to agriculture Construction for preservation and storage of processed agro-products and perishables, including quality-testing facilities	Cold chain, grain silo, pack-house, fruit-testing laboratory, agro-processing infrastructure.
3. Water management	Water supply or distribution Irrigation Water treatment	Municipal water network, irrigation canal, desalination or treatment plant.
4. Telecommunication	Basic or cellular telecommunication, including radio paging Domestic satellite service through a satellite owned and operated by an Indian company for telecommunication service Trunking networks, broadband networks and internet services	Mobile network, broadband backbone, domestic satellite telecom platform.
5. Industrial, commercial and social development and maintenance	Real-estate development, including industrial parks and special economic zones Tourism, including hotels, convention centres and entertainment centres Public markets and buildings, trade fairs, convention, exhibition and cultural centres, sports and recreation infrastructure, public gardens and parks Construction of educational institutions and hospitals Other urban development, including solid-waste management, sanitation and sewerage systems	Industrial park, hotel project, hospital campus, exhibition centre, municipal waste-processing system.
6. Power	Generation through thermal, hydro, nuclear, fossil fuel, wind and other renewable sources Transmission, distribution or trading of power by laying a network of new transmission or distribution lines	Solar generation park, hydro plant, new transmission network, distribution-line expansion.
7. Petroleum and natural gas	Exploration and production Import terminals Liquefaction and re-gasification Storage terminals Transmission and distribution networks, including city-gas infrastructure	LNG terminal, gas pipeline, city-gas network, exploration and production facility.
8. Housing	Urban and rural housing, including public or mass housing and slum rehabilitation Allied activities such as drainage, lighting, roads, sanitation and facilities	Affordable mass-housing project with roads, drainage, lighting and sanitation.
9. Other miscellaneous facilities and services	Mining and related activities Technology-related infrastructure Manufacturing of components, materials, utilities or facilities required by the infrastructure sector, including energy-saving and metering devices Environment-related infrastructure Disaster-management services Preservation of monuments and icons Emergency services, including medical, police, fire and rescue	Data infrastructure, smart meters, pollution-control facility, disaster-response platform, fire and rescue network.
10. Other facility or service as may be prescribed	Residual enabling category requiring a separate operative prescription before reliance	Do not rely on this category without locating the specific prescription in force.

Use of "includes": The Schedule uses inclusive language, but reliance should remain connected to the statutory head and supported by the project's substance, contracts, approvals, assets and revenue model.

Decision architecture

Section 55 and section 186 are different tests

Section 55

Long-tenure preference shares for infrastructure projects

Control	Requirement	Evidence
Issuer	Company limited by shares and engaged in setting up and dealing with an infrastructure project.	Memorandum, project documents, Board analysis and business evidence.
Authority	Articles authorise preference shares and members pass the required special resolution.	Articles, notice, explanatory statement, minutes and MGT-14 where applicable.
Tenure	More than 20 years but not more than 30 years under Rule 10.	Term sheet, offer document and register.
Annual redemption	Minimum 10% of the preference shares per year from the 21st year onwards or earlier, proportionately, at the option of preference shareholders.	Redemption calendar and shareholder-option mechanics.
Normal redemption safeguards	Fully paid shares; redemption from eligible profits or fresh issue; CRR where profits are used; premium provided under the applicable route.	Audited reserves, bank trail, CRR entry and Board papers.
Issue terms	Priority, participation, dividend, conversion, voting, redemption and premium terms must be fully disclosed under Rule 9.	Special-resolution notice and preference-share terms.

Example: A toll-road project company proposes 30-year preference shares of Rs. 100 crore. Its terms should provide minimum redemption of Rs. 10 crore each year from year 21 through year 30, unless redemption starts earlier at the preference shareholders' option.

Non-example: A general manufacturing company cannot use the 30-year route merely because it builds a captive warehouse, power unit or internal road unless the statutory infrastructure-company and project conditions are genuinely satisfied.

Section 186

Infrastructure-provider exemption from inter-corporate finance controls

Section 186(11)(a) excludes specified transactions of a company established with the object of and engaged in the business of providing infrastructural facilities from section 186, except subsection (1).

Layer	Question	Professional response
Facility	Does the underlying facility fall within Schedule VI?	Identify the exact head and sub-category; retain project evidence.
Constitution	Was the company established with the object of providing such facilities?	Review the memorandum as a whole, not an incidental or generic object alone.
Actual business	Is the company engaged in providing those facilities?	Review revenue, assets, employees, contracts, licences and operating activity.
Transaction	Is the exemption being used for a loan, guarantee, security or investment by that company?	Document Board reasoning and consistency with business purpose.
Residual control	What still applies?	Section 186(1) remains. Other Companies Act, related-party, director-loan, FEMA, sectoral and contractual controls may also apply.

Do not over-read the exemption: A company purchasing one infrastructure asset or investing in one infrastructure SPV does not automatically become a company established and engaged in providing infrastructure facilities.

Normal section 186 route

Fallback where the infrastructure exemption is not supportable

The normal section 186(2) ceiling is the higher of:

60% of paid-up share capital, free reserves and securities premium account; or
100% of free reserves and securities premium account.

Control	Normal requirement
Beyond ceiling	Prior special resolution, subject to statutory exceptions.
Board approval	Resolution at a Board meeting with consent of all directors present.
PFI approval	Prior approval where a term loan is subsisting, unless the statutory proviso is satisfied.
Interest	Loan rate cannot be lower than the closest-tenor Government Security yield.
Deposit default	No loan, guarantee, security or acquisition while the deposit default continues.
Register and disclosure	Maintain MBP-2 and disclose particulars and utilisation purpose in financial statements.

Example: Paid-up capital Rs. 100 crore, free reserves Rs. 40 crore and securities premium Rs. 10 crore. The first limb is Rs. 90 crore; the second is Rs. 50 crore. The normal section 186 ceiling is Rs. 90 crore.

Classification discipline

What evidence should support the infrastructure conclusion?

Project-level evidence

Concession, EPC, O&M, supply or service agreements
Land, licence, regulatory and environmental approvals
Technical design, capacity and commissioning records
Revenue model and user/off-take arrangements
Asset ownership and project-SPV structure

Company-level evidence

Memorandum objects and incorporation purpose
Audited revenue and segment information
Operational assets, employees and licences
Board-approved business plan and financing policy
Consistency of tax, accounting, regulatory and lender descriptions

Best practice: Prepare a one-page legal classification memo quoting the exact Schedule VI head, the applicable section and rule, entity facts, contrary facts and conclusion.

Sector map

Companies Act classification does not replace sector law

Schedule VI area	Additional legal layers commonly relevant
Road, rail, port and aviation	Concession terms, land, safety, tariff, transport and authority approvals.
Power and gas	Generation/transmission/distribution licences, grid, tariff, environment and energy-sector regulation.
Telecommunication	Telecom licensing, spectrum, satellite, network-security and data rules.
Housing and real estate	Land title, development permissions, RERA, zoning, environment and consumer obligations.
Hospitals and education	Sector approvals, clinical/education regulation, land-use and public-safety requirements.
Mining and environment	Mining rights, forest/environment clearance, rehabilitation and closure obligations.

Practical cases

Twelve classification scenarios

1. Captive logistics centre: Logistics services are listed, but a captive internal warehouse may not establish that the company is engaged in providing logistics infrastructure to others.

2. Hotel project: Tourism including hotels is expressly within head 5; section 55 and section 186 still require their separate issuer/entity tests.

3. Data centre: Technology-related infrastructure can support head 9, subject to factual infrastructure characteristics and documentation.

4. Solar plant: Renewable power generation falls within head 6.

5. Power trader without new lines: The text links power trading to laying a new transmission or distribution network. Analyse the actual project rather than relying only on a trading licence.

6. General real-estate company: Real-estate development is listed, but a section 186 exemption still needs the constitutional-object and actual-business tests.

7. Hospital operator: Construction of hospitals is listed. Pure operation of an acquired hospital should be matched carefully to the statutory wording and business substance.

8. Smart-meter manufacturer: Manufacturing metering devices required by the infrastructure sector is listed under head 9.

9. Agricultural testing lab: Quality-testing facilities connected with preservation and storage of processed agro-products and perishables fall within head 2.

10. City-gas network: Expressly included under petroleum and natural-gas transmission/distribution networks.

11. Emergency-response platform: Medical, police, fire and rescue emergency services are listed under head 9.

12. New unlisted service: Head 10 cannot be used merely by analogy; locate the operative prescription before reliance.

Approval and evidence

Transaction control file

Route	Core documents	Post-transaction controls
Section 55 infrastructure preference issue	Objects/articles, Board and special resolution, Rule 9 statement, valuation/offer documents, project classification memo, PAS-3 and register entries.	Dividend, option mechanics, year-21 redemption calendar, CRR, premium and accounting disclosures.
Section 186(11) infrastructure-provider position	Objects, audited business evidence, exact Schedule VI category, Board legal memo and transaction-purpose analysis.	Section 186(1) layer control, financial reporting, related-party/director/FEMA/sector checks.
Normal section 186	Limit calculation, Board approval, PFI approval where required, special resolution where required and MBP-2.	Interest, utilisation, financial-statement disclosure and continuing default monitoring.

Audit and secretarial checklist

High-risk review points

Classification risks

Using a broad marketing label instead of the statutory sub-category
Relying on incidental objects
Confusing project construction with later operation
Using head 10 without an operative prescription
Ignoring mixed or captive use

Transaction risks

Preference tenure above 30 years
No year-21 redemption mechanics
Section 186 exemption used without entity evidence
Section 185, 188 or FEMA analysis omitted
No Board memo or MBP-2 where normal section 186 applies

Finin2min Q&A

Quick answers

Does every Schedule VI project qualify for 30-year preference shares?
No. The issuer must satisfy section 55 and Rules 9-10, including being engaged in setting up and dealing with the infrastructure project.

Does a Schedule VI project automatically create a section 186 exemption?
No. The company itself must be established with the object of and engaged in providing infrastructural facilities.

What remains under section 186 even when subsection (11) applies?
Subsection (1), the investment-layer control, remains.

Can infrastructure preference shares run for 35 years?
No. Rule 10 caps the special route at 30 years.

When does the minimum annual redemption begin?
From the 21st year, or earlier at the preference shareholders' option, on a proportionate basis.

Source and professional-use control

Companies Act, 2013 - sections 55 and 186 and Schedule VI, consolidated India Code text.

Companies (Share Capital and Debentures) Rules, 2014 - Rules 9 and 10, India Code.

Companies (Meetings of Board and its Powers) Rules, 2014 - section 186 records and approval framework.

Professional-use note: Educational material; apply current sector regulation, tax, accounting, FEMA, listing and lender requirements to the transaction facts.