Amendment to Master Circular for Real Estate Investment Trusts (REITs) dated May 15, 2024
Summary
This circular amends the Master Circular for REITs to relax lock-in requirements for units allotted in preferential issues and permits inter-se transfers of such locked-in units. It introduces a new regulatory framework for follow-on offers by publicly offered REITs, detailing procedural guidelines, disclosure norms, and fee structures. The amendments are issued under Section 11(1) of the SEBI Act and specific regulations within the REIT Regulations, effective immediately.
Text
Para 10.6.1. of the Master Circular for REITs dated May 15, 2024 is amended as under: “10.6.1. The units allotted to sponsor(s) and sponsor group(s) shall be locked-in as under: a) fifteen percent of the units allotted to sponsor(s) and sponsor group(s) shall be locked-in for a period of three years from the date of trading approval granted for the units; b) the remaining units allotted to sponsor(s) and sponsor group(s) shall be locked-in for a period of one year from the date of trading approval granted for the units. Provided that the sponsor(s) and sponsor group(s) shall comply with the minimum unitholding requirement specified in Regulation 11(3) of SEBI (Real Estate Investment Trusts) Regulations, 2014, at all times.”
“10.6.5. Units allotted under a preferential issue to a sponsor or its sponsor group entities which are subject to lock-in, may be transferred among such sponsor or its sponsor group entities, subject to the condition that the lock-in on such units shall continue for the remaining period with the transferee and such transferee shall not be eligible to transfer such units till the expiry of the lock-in period originally applicable to such units. Explanation: In case of an REIT with multiple sponsors, locked-in units held by a sponsor or its sponsor group entities shall be permitted to be transferred only within such sponsor or its own sponsor group entities and not to any other sponsor or their sponsor group entities. Provided further that in the event of a change in sponsor, the locked-in units held by the outgoing sponsor or its sponsor group entities may be transferred to the incoming sponsor or its sponsor group entities, subject to the condition that the incoming sponsor or its sponsor group entities shall continue to comply with the minimum unitholding requirements as specified under the REIT Regulations after such transfer. Provided further that in case of conversion to a self-sponsored manager, locked-in units held by the outgoing sponsor or its sponsor group entities may be transferred to the self-sponsored manager or its shareholders or group entities of the self-sponsored manager, subject to the condition that the self-sponsored manager or its shareholders or group
it is proposed to modify Chapter 2, titled “Guidelines for public issue of units of REITs” of the Master Circular for Real Estate Investment Trusts dated May 15, 2024 by inserting the following provisions:
The provisions specified in Chapter 2 of this Master Circulars which are applicable for public issue of units of REIT are also applicable for follow-on offer by an REIT.
For issuing units through a follow-on offer, the REIT shall pay fees to the Board as specified in Schedule II of REIT Regulations along with follow-on offer document / draft follow-on offer document, as applicable.
A REIT making a follow-on offer shall ensure that: 2.19.1. It has made an application to all stock exchanges on which its units are listed, to seek an in-principle approval for listing of its units on such stock exchanges and has chosen one of them as the designated stock exchange. 2.19.2. Units shall be issued mandatorily in dematerialized form.
The Manager and the merchant banker(s) shall be responsible for obtaining in-principle approval and final listing and trading approvals from the stock exchange(s).
The amount for general purposes, as mentioned in objects of the issue in the follow-on offer document filed with the Board shall be as specified under sub-regulation (22A) of Regulation 14 of the REIT Regulations.
The minimum public unitholding shall be at least twenty-five percent of the total outstanding units of the REIT on post issue basis.
The provisions of Regulation 15 of the REIT Regulations shall be applicable for follow-on offer document and advertisements in relation to a follow-on offer.
The timelines for allotment and listing of units of REIT shall be as per the timelines specified in case of initial public offer as mentioned in Chapter 2 of the Circular on Master Circular for REITs.
The provisions specified under sub-regulations (20) and (21) of Regulation 14 of REIT Regulations shall be applicable mutatis mutandis pertaining to, payment of interest in relation to a follow-on offer in case of failure to allot or list units.
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Source: SecMarx — Amendment to Master Circular for Real Estate Investment Trusts (REITs) dated May 15, 2024. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.