New Delhi: The Securities and Exchange Board of India (Sebi) has introduced various methods, including an offer for sale, rights issue, and bonus issuance, to help Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) comply with the minimum 25% public holding requirement.
Under the rule, any listed REIT or InvIT with a public unitholding below 25% must increase it to at least 25% within three years from the date of unit listing. To facilitate compliance with the minimum public unitholding rule, Sebi has mandated that trust managers adopt any method suggested by the regulator.
These methods include issuing units to the public through an offer document, conducting an offer for sale (OFS) of units held by sponsors, managers, and their associates via an offer document, and conducting an OFS of units through the stock exchange mechanism.
In addition, Sebi has provided avenues such as rights issues, bonus issues, institutional placement of units, and the sale of units held by sponsors, managers, and their associates in the open market, subject to certain conditions. Sebi has instructed stock exchanges to monitor the methods employed by REITs and InvITs to increase their public unitholdings. Any non-compliance observed by the exchanges will be reported to the regulator on a quarterly basis.
REITs and InvITs are relatively new investment instruments in India but have gained significant popularity in global markets.
While REITs comprise a portfolio of leased commercial real assets, InvITs consist of infrastructure assets like highways and power transmission assets.
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