Update 28.01.2019- Consultation paper for amendment of SEBI InvITs Regulation, 2014 and SEBI REITs Regulation, 2014

– The following are the proposals for amendment:

• Reduction in the minimum allotment and trading lot for publicly issued InvITs and REITs- 
  

  	REITS	INVITS
  Current regulatory framework	·         Minimum subscription in an initial offer and a follow- on offer from any investor shall be Rs. 2 lakhs. ·         The prescribed trading lot for the purpose of trading of units of the REIT on the designated stock exchange, is Rs. 1 lakh.	·         Minimum subscription in an initial offer and a follow- on offer from any investor shall be Rs. 10 lakhs. ·         Trading lot for the purposes of trading of publicly listed units, on the designated stock exchange, shall be Rs. 5 lakhs.
  Proposal	The minimum application and  trading  lot for publicly issued  InvITs and  REITs is proposed to be revised as follows: a.    At the time of initial/follow-on issue, the minimum application and allotment lot shall be of 100 units and the value of one such lot shall be within the range of Rs. 15,000– Rs. 20,000. b.    Allotment shall be made in multiples of a lot. c.    After initial listing, a trading lot shall also be of 100 units.

For InvITs

1. Increase in the leverage limit-
   • Current regulatory framework: Regulation   20(2)   of the InvIT Regulations provides   that   the   aggregate consolidated borrowings  and  deferred  payments  of  the  InvIT  net  of  cash  and cash equivalents  shall  never  exceed 49  % of  the  value  of  the  InvIT  assets. Regulation  22(4)(b)  of  the  InvIT  Regulations,  any  borrowing exceeding  25%  of  the  value  of  the  InvIT  assets  requires unit  holders’ approval and mandatory credit rating.
   • Proposal- It is proposed that the leverage limit for InvITs be increased from existing 49% to 70%.
2. New regulatory structure for privately placed unlisted InvITs- 
   • Current regulatory framework- The InvIT Regulations provide for mandatory listing of units of InvITs, issued either through publicissue or on private placement basis.
   • Proposal-  The regulatory framework for privately placed listed InvITs, including registration requirements, structural obligations, operational requirements, corporate governance and investor protection measures, etc. shall be made applicable mutatis-mutandis for the proposed framework for privately placed unlisted InvIT.

Public comments are invited on the proposed framework given at Para 4, 5 and 6 above. The comments, may be sent by email or through post, latest by February 18, 2019.  Read More

Detailed article can be read here.