SEBI has vide its circular dated 14th May, 2021 given relaxation to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trust (InvITs) allowing them to file their regulatory filings by giving them one month more for the same. Gist of the circular enclosed.
SEBI is in receipt of representations from InvITs and REITs requesting extension of timelines for various regulatory filings and compliances for InvITs and REITs for the period ending March 31, 2021, inter-alia, due to ongoing second wave of the CoVID-19 pandemic and restrictions imposed by various state governments.
- After consideration, it has been decided to extend the due date for regulatory filings and compliances for InvITs and REITs for the period ending March 31, 2021 by one month over and above the timelines, prescribed under SEBI (Infrastructure Investment Trusts) Regulations, 2014 (InvIT Regulations) and SEBI (Real Estate Investment Trusts) Regulations, 2014 (REIT Regulations) and circulars issued thereunder.
SEBI has vide its notification dated 26th February, 2021 allowed the annual meeting of the unit holders of the Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (InvIT) to be held on video conferencing mode or any other audio visual means upto 31st December 2021 and any other meetings other than annual meetings upto 30th June, 2021. The gist of the circular is given below
SEBI vide circular no. SEBI/HO/DDHS/DDHS/CIR/P/2020/102 dated June 22, 2020 read with circular no. SEBI/ HO/ DDHS/ DDHS/CIR/P/2020/201 dated October 08, 2020 permitted REITs/InvITs to conduct annual meetings and other meetings of unitholders through VC or OAVM up to December 31, 2020.
- Representations have been received to further extend the aforesaid facility to conduct meetings of unitholders which become due in the year 2021 through VC or OAVM for some more time. It is observed that MCA, vide circulars dated December 31, 2020 and January 13, 2021, permitted companies to conduct their Extraordinary General meetings upto June 30, 2021 and Annual General meetings due in the year 2021 through VC or OAVM.
- Accordingly, it has been decided to extend the facility to conduct meetings of unitholders, through VC or OAVM for REITs/InvITs, as under:
a. Annual meetings of unitholders in terms of Regulation 22(3) of SEBI (Real Estate Investment Trusts) Regulations, 2014 and Regulation 22(3)(a) of SEBI (Infrastructure Investment Trusts) Regulations, 2014, (which becomes due in the calendar year 2021) to be conducted till December 31, 2021.
b. For meetings other than annual meeting of unitholders till June 30, 2021.
- REITs/ InvITs shall comply with the procedure prescribed in Annexure-I of SEBI circular no. SEBI/ HO/ DDHS/ DDHS/ CIR/P/2020/102 dated June 22, 2020.
- SEBI issued circular SEBI/HO/DDHS/DDHS/CIR/P/2019/143 dated November 27, 2019 providing guidelines for preferential issue and institutional placement of units by listed InvITs. The said circular stands modified as under:
1.1.Clause 4.1 of Annexure I is modified as under:
“4.1. Preferential issue of units shall not be made to any person who has sold or transferred any units of the issuer during the six months preceding the relevant date.
Explanation: Where any person belonging to sponsor(s) has sold/ transferred their units of the issuer during the six months preceding the relevant date, the sponsor(s) shall be ineligible for allotment of units on preferential basis.”
The highlighted portion i.e the explanation has been added by this amendment.
The earlier circular can be found here
SEBI circular dated 4th November, 2020 laying down guidelines for issue of rights units by unlisted infrastructure investment trust (InvIT).
Chapter VIA of the of SEBI (Infrastructure Investment Trusts) Regulations, 2014 (InvIT Regulations) provides the framework for private placement of units by InvITs which are not eligible to be listed. In order to enable unlisted InvITs to raise further funds, it has been decided to provide a mechanism for raising of funds by unlisted InvITs through rights
issue of units. For the purpose of this circular “rights issue” shall mean an offer of units by an unlisted InvIT to the unit holders of the InvIT as on the record date fixed for the said purpose. The guidelines in respect of a rights issue of units by an unlisted InvIT are given below.
- Conditions for issuance
1.1.No InvIT shall make a rights issue of units unless the following conditions are satisfied:
1.1.1. A resolution of the board of directors of the investment manager approving the rights issue of units and determining the record date has been passed.
1.1.2. Units of the same class, which are proposed to be allotted are already issued by the InvIT.
1.1.3. None of the respective promoters or partners or directors of the sponsor(s) or investment manager or trustee of the InvIT is a fugitive economic offender declared under section 12 of the Fugitive Economic Offenders Act, 2018 (17 of 2018).
1.1.4. None of the respective promoters or partners or directors of the sponsor(s) or investment manager or trustee of the InvIT
(a) is debarred from accessing the securities market by the Board;
(b) is a promoter, director or person in control of any other company or a
sponsor, investment manager or trustee of any other InvIT which is
debarred from accessing the capital market under any order or
directions made by the Board;
2.1. If the InvIT desires to have the issue underwritten, it may appoint underwriters in accordance with the Securities and Exchange Board of India (Underwriters) Regulations, 1993.
- Letter of Offer
3.1. The investment manager, on behalf of the InvIT shall file a letter of offer with the Board at least 5 days prior to opening of the issue
3.2. The investment manager, on behalf of the InvIT, shall carry out the obligations relating to the issue.
3.3. The investment manager shall ensure that disclosures made in the letter of offer contains material, true, correct and adequate disclosures and are in accordance with the InvIT Regulations and guidelines or circulars issued thereunder.
3.4. The letter of offer shall contain disclosures as specified in Annexure I of this Circular.
3.5. The letter of offer shall also be furnished to the Board in soft copy.
4.1.The application form for the issue shall be prepared by the investment manager and the investment manager shall make arrangements for distribution of the application form along with letter of offer to all unit holders as on the record date at least five days prior to the opening of the issue.
- Pricing of Units
5.1.The investment manager on behalf of the InvIT shall decide the issue price before determining the record date.
5.2.The issue price shall be disclosed in the letter of offer.
6.1. The rights issue shall open within three months from the record date.
6.2.The rights issue shall be kept open for at least three working days but not more than fifteen working days.
- Manner of issuance of units
7.1.The units shall be allotted in the dematerialized form only.
7.2.The rights entitlements shall be credited to the demat account of the unitholders before the date of opening of the issue. The rights entitlements shall include a right exercisable by the person concerned to renounce the units offered to him/her or any of them in favour of any other person and letter of offer and the notice sent to the unitholders shall contain a statement to this effect.
8.1.The minimum allotment to any investor shall be INR 1 crore.
8.2.Allotment shall be made in the following manner:
8.2.1. full allotment to those eligible unitholders who have applied for their rights entitlement either in full or in part and also to the renouncee(s), who has/have applied for the units renounced in their favour, in full or in part, as adjusted for fractional entitlement.
8.2.2. allotment to eligible unitholders who having applied for the units in full to the extent of their rights entitlement and have also applied for additional units shall be made as far as possible on an equitable basis, having due regard to the number of units held by them on the record date, provided there is an undersubscribed portion after making allotment in (a) above.
8.2.3. allotment to the renouncees, who having applied for the units renounced in their favour and also applied for additional units, provided there is an undersubscribed portion after making full allotment specified in (a) and (b) above. The allotment of such additional units may be made on a proportionate basis.
8.2.4. Allotment to the underwriter appointed for the issue, if any, at the discretion of the board of directors of the investment manager, subject to disclosure in the letter of offer as applicable.
- Restriction on further capital issues
9.1.The InvIT shall not make any further issue of units in any manner during the period between the date of filing the letter of offer with the Board and the allotment of the units offered through the letter of offer.
9.2.The InvIT shall file an allotment report with the Board providing details of the allottees and allotment made within 15 days of the issue closing date.
For disclosures in the letter of offer, please visit the above link.
The International Financial Services Centres Authority (IFSCA), with an objective to develop the financial products and services in the Gujarat International Finance Tec-City International Financial Services Centre (GIFT IFSC) has prescribed the regulatory framework for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) in IFSC.
IFSCA has permitted global participants i.e. REITs and InvITs incorporated in FATF compliant jurisdictions to list on the stock exchanges in GIFT IFSC.Additionally, InvITs have been permitted to raise funds through private placements also.
The REITs and InvITs registered in IFSC have been permitted to invest in real estate assets and infrastructure projects respectively in IFSC, India and other foreign jurisdictions, which is in line with the framework provided in the global financial centres.
Additionally, the REITs and InvITs that are already listed in any of the permissible jurisdictions other than IFSC (currently USA, Japan, South Korea, United Kingdom excluding British Overseas Territories, France, Germany, Canada and India) or India have been permitted to list and trade on the recognised stock exchanges in IFSC, subject to compliance with their respectivelaws of home jurisdiction.
The listing of REITs and InvITs in IFSC shall be in accordance with the requirements of the stock exchanges in IFSC.
The entities in IFSC can participate and benefit from the growth of real estate and infrastructure sector in international jurisdictions.
Further details on the framework for REITs and InvITsare available on the IFSCA website at the URL:https://ifsca.gov.in/Circular
SEBI circular dated 8th October, 2020 allowing unit holders of InvITs and REITs to hold their extraordinary meetings by video conferencing or any other audio visual means upto 31st December, 2020. Read on.
Subject: Extension of facility for conducting extraordinary meeting(s) of unit holders of InvITs and REITs through Video Conferencing or Other Audio-Visual Means (VC/OAVM)
- Kindly refer to SEBI circular no. SEBI/HO/DDHS/DDHS/CIR/P/2020/102 dated June 22, 2020, whereby InvITs/ REITs were permitted to conduct meetings of unitholders through VC or OAVM subject to compliance with the procedure specified therein.
- Vide clause 6 of the aforesaid circular, the facility of VC or OAVM was made available for annual meeting of unitholders in terms of Regulation 22(3)(a) of InvIT Regulations and Regulation 22(3) of REIT Regulations, to be conducted during calendar year 2020. For meetings, other than annual meeting of unitholders, the facility for conducting meeting of
unitholders through VC or OAVM was provided upto September 30, 2020.
- In this respect, representations have been received for extending the facility of VC or OAVM for conducting extraordinary meetings of unitholders for some more time due to the pandemic.
- In this regard, it has now been decided to extend the facility of VC or OAVM for conducting extraordinary meetings(s) of unitholders by InvITs/ REITs upto December 31, 2020, subject to compliance with the procedure prescribed in Annexure-I of SEBI circular no. SEBI/ HO/ DDHS/ DDHS/ CIR/P/2020/102 dated June 22, 2020.
SEBI has issued two circulars, both dated 28th September, 2020 in respect of amendments to guidelines for preferential issue and institutional placement by a listed InvIT and REIT. The amendments are identical in all respects except of course for the clause nos. in the respective guidelines.
The amendments are as follows:
- Clause 2.6 of the Guidelines is modified as under:
“The REIT shall not make any subsequent institutional placement until the expiry of two weeks from the date of the prior institutional placement made pursuant to one or more special resolutions.”
- After clause 2.1 and before clause 2.2 of sub-paragraph (A) of paragraph 2 of Annexure-I, the following provisos shall be inserted:
“Provided that, for any preferential issue made between the date of this circular and December 31, 2020, the REIT may opt for a pricing method where the price of the units to be allotted pursuant to the preferential issue shall not be less than the higher of the following:
(a) the average of the weekly high and low of the volume weighted average price of the related units quoted on the recognised stock exchange during the twelve weeks preceding the relevant date; or
(b) the average of the weekly high and low of the volume weighted average prices of the related units quoted on a recognised stock exchange during the two weeks preceding the relevant date.
Provided further that, units allotted on a preferential basis using the pricing method set out in the first proviso shall be locked-in for a period of three years:
Provided further that, all allotments arising out of the same unitholders approval shall follow the same pricing method.”
- After clause 3.1 of paragraph 3 of Annexure-I, the following explanation shall be inserted:
Explanation: For the computation of the lock-in requirement, the units held by the sponsor(s) and locked-in for three years, in the past in terms of Regulation 11 (3) of the REIT Regulations shall be taken into account. The units locked-in pursuant to Regulation 11(3) of the REIT Regulations shall not be put under fresh lock-in again, even though they are considered for computing the lock-in requirement, in case the said units are free of lock-in at the time of the preferential issue.
SEBI circular dated 16th September, 2020 on the subject matter.
Sub: Listing and trading of units of Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) on recognized stock exchanges in International Financial Services Centres (IFSC)
- Securities and Exchange Board of India (International Financial Services Centre) Guidelines, 2015 were notified by SEBI on March 27, 2015, which came into force on April 01, 2015.
- Clause 7 of SEBI (IFSC) Guidelines, 2015 specifies the types of securities in which dealing may be permitted by stock exchanges operating in IFSC. It has been decided to permit ‘Units of InvITs and REITs by whatever name called in the Permissible Jurisdictions’ as permissible security under sub-clause (vi) of Clause 7 of SEBI (IFSC) Guidelines, 2015.
- Accordingly, ‘Units of InvITs and REITs by whatever name called in the Permissible Jurisdictions’ meeting the following conditions may be permitted to list on stock exchanges operating in IFSC:
i. Such InvITs and REITs which are incorporated/settled in Permissible Jurisdictions, as may be notified by the Government of India from time to time pursuant to notification no. G.S.R. 669(E) dated September 18, 2019 in respect of sub-rule 1 of rule 9 of Prevention of Money-Laundering (Maintenance of Records) Rules, 2005;
In this regard, the Government of India vide notification dated November 28, 2019, has notified the list of Permissible Jurisdictions in pursuance of notification dated September 18, 2019. Accordingly, a list of Permissible Jurisdictions for the purpose of this clause is placed at Annexure A.
ii. Such InvITs and REITs are regulated by the securities market regulator(s) in the Permissible Jurisdictions.
iii. Such InvITs and REITs are listed on any of the specified international exchanges in the Permissible Jurisdiction. A list of International Exchanges for the purpose of this clause is also placed at Annexure A.
- Stock exchanges in IFSC shall evolve a detailed framework prescribing the initial and continuous listing requirements for such InvITs and REITs whose units are listed/proposed to be listed on stock exchanges in IFSC (based on para 3 above).
- The applicability of this circular is subject to such conditions that may be prescribed by SEBI, Reserve Bank of India and other appropriate authority from time to time.
List of Permissible Jurisdictions and International Exchanges
- United States of America – NASDAQ, NYSE
- Japan – Tokyo Stock Exchange
- South Korea – Korea Exchange Inc.
- United Kingdom excluding British Overseas Territories- London
- France – Euronext Paris
- Germany – Frankfurt Stock Exchange
- Canada – Toronto Stock Exchange
SEBI has vide two identical circulars dated 17th July, 2020 made rules giving exit option to dissenting holders in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (INvIT).
Dissenting unit holders means those who have not voted in favour of the resolution under regulation 22(6A) or regulation 22(8) of the SEBI (REIT) Regulations or Regulation 22(5C) or Regulation 22(7) of the SEBI (InvIT) Regulations.
These sub regulations pertain to trustee and investment manager seeking delisting of the units and securing approval of the unit holders for the same AND change in sponsor or designated sponsor or change in control of sponsor or designated sponsor and seeking approval of the unit holders for the same.
Under both these exit option regulations, detailed provisions have been made in respect of what acquirer and investment manager is required to do in sequential fashion, the escrow account to be created, price to be arrived at, Letter of Offer to be given, meeting to be convened of the unit holders for voting and submission of compliance report thereon.
SEBI circulars can be found on SEBI site.