On 26th September 2024, the Securities and Exchange Board of India (SEBI) has introduced certain amendments in the “ SEBI (Infrastructure Investment Trusts) Regulations, 2014, and in the “ SEBI (Real Estate Investment Trusts) Regulations, 2014” in exercise of powers given under section 30 read with sections 11 and 12 of the SEBI Act, 1992 (15 of 1992).
- The most significant change introduced by the SEBI is that it has reduced the trading lot size of privately placed Infrastructure Investment Trusts (InvITs) to Rs 25 lakh. This move aims to boost investors’ participation and increase liquidity of such investment vehicles.
- These new regulations are now known as the SEBI (Infrastructure Investment Trusts) (Third Amendment) Regulations, 2024 and SEBI (Real Estate Investment Trusts) (Third Amendment) Regulations, 2024.
- These regulations are came into effect from the day of its official notification by SEBI, while some of the provisions will come into force 60 days later.
Note: Earlier, the trading lot for secondary market trading for privately placed InvITs was Rs 1 crore. If the InvIT invests minimum 80% of its asset value in completed and revenue generating assets, then the trading lot was Rs 2 crore.
Key Changes for REITs and InvITs:
i.SEBI has mandated that for publicly placed InvITs, the distributions declarations must be made at least semi-annually i.e. once every 6 months in every financial year and annually for privately placed InvITs.
ii.As per new regulations, SEBI has fixed the timeline for undertaking distributions to unit holders by Real Estate Investment Trusts (REITs) and InvITs to 5 working days from the record date.
- This will help in bringing efficiency to the distribution process and will help in making funds available to investors in shorter period of time.
ii.SEBI has now permitted both REITs and InvITs to call a meeting of unitholders after giving shorter notice i.e. less than 21 days, if consent is granted by writing or in electronic mode.
- In order to call an annual meeting, consent of minimum 95% of unit holders will be required and in case of any other meeting, consent by majority of the unit-holders will be required.
iii.The new regulations has mandated for all unit holder meetings, the manager of REIT/ investment manager of InVITs are required to provide an option to unit holders to attend the meeting via video conferencing or other audio-visual means as the option of remote electronic voting.
iv.As per new regulations, for any issue taken up in such meetings that require approval from the unit holders, it is mandatory that votes cast in favour of the resolution should be 50% of the total votes cast for the resolution unless otherwise specified.
v.SEBI has specified that the manager and the trustee must ensure that adequate backup systems, data storage capacity as well as some other arrangements for alternative means of communication are maintained for the records maintained in electronic form.
vi.Also, the manager and the trustee are required to ensure that a business continuity plan and disaster recovery site is in place for the records maintained electronically, to maintain data and transaction integrity.
Important Terms:
i.InvIT: It is similar to mutual fund, which allows direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as return.
ii.REIT: It is a company that owns and operates income-generating real estate or related assets. These may include office buildings, shopping malls, hotels, warehouses, among others.
About Securities and Exchange Board of India (SEBI):
SEBI is the apex regulatory body for securities and commodity market in India. It was initially established as non-statutory body in April 1988. Later, SEBI was accorded the status of statutory body through SEBI Act, 1992 on 30th January, 1992.
Chairman- Madhabi Puri Buch
Headquarters– Mumbai, Maharashtra
