The Securities and Exchange Board of India in its Notification dated 17th January 2020 has specified the manner of issuance of units under the rights issue by listed real estate investment trust (REIT) and infrastructure investment trust (InvIT).
The Guidelines prescribe conditions for issuance, Appointment of merchant banker(s) and other intermediaries, filing of draft letter of offer and letter of offer, application, pricing of units, timelines, manner of issuance of units, and restrictions on further issuance of units.
SEBI has allowed listed REIT and InvIT to make a rights issue of units, based on serveal conditions, including these investment vehicles obtaining in-principle approval of the stock exchanges for listing of units proposed to be issued, besides none of the respective promoters or partners or directors of the sponsor or manager or trustee of the REIT and InvIT is a fugitive economic offender and should not be barred from the securities market.
The Manager on behalf of the REIT and InvIT shall appoint one or more merchant bankers to carry out obligations relating to the issue and shall decide the issue price before determining the record date in consultation with the lead merchant banker.
The investment manager, on behalf of InvIT and REIT need to announce the record date to stock exchange at least three working days (excluding the date of intimation and the record date) prior to the record date. InvIT and REIT will not withdraw its rights issue after the announcement of the record date.
The minimum subscription to be received in the rights issue shall be 90% of the issue size through the letter of offer and If the minimum subscription as specified above is not received, the application money shall be refunded to the applicants forthwith, but not later than 15 days from the issue closing date.
Further the issuer will have to disclose objects of the issue, related-party transactions, valuation, financial details, review of credit rating and the grievance redressal mechanism in the placement document.
The lead merchant banker shall ensure that the information contained in the draft letter of offer and letter of offer and the particulars as per audited financial statements in the letter of offer are not more than six months old from the issue opening date.
Click here to read the infrastructure investment trusts (InvITs) Notification.
Click here to read the real estate investment trusts Notification.
