Sebi mulls to cut trading lot size of privately placed InvITs to boost investors' participation

Markets regulator Sebi on Thursday proposed to drastically reduce the trading lot size of privately placed infrastructure investment trusts (InvITs) to Rs 25 lakh in a bid to boost investors' participation and increase liquidity of such investment vehicles.

The current trading lot for secondary market trading for privately placed InvITs is set at Rs 1 crore. Further, if the InvIT invests at least 80 per cent of its asset value in completed and revenue-generating assets, then the trading lot is Rs 2 crore.

In its consultation paper, Sebi has proposed "to reduce the trading lot size for the purpose of trading units of privately placed InvITs on designated stock exchanges from Rs 1 crore/ Rs 2 crore to Rs 25 lakh".

The proposal will help in increasing the liquidity of privately placed InvIT units by allowing a broader base of investors to participate in the market and promote diversification of investment portfolios, enabling investors to better manage risk.

Additionally, the regulator has proposed several measures to reduce the compliance burden and facilitate ease of doing business InvITs and real estate investment trusts (REITs).

The Securities and Exchange Board of India (Sebi) has sought comments from the public till May 30 on the proposals.

Under the proposal, the regulator has suggested fixing the time for undertaking distributions to unitholders by the REIT and InvIT to five working days from the date of declaration. The move is expected to bring efficiency to the distribution process and will aid in making funds available to investors within a relatively shorter period of time.

Further, the regulator suggested providing flexibility to the manager/ investment manager of REIT/InvIT to fix record dates. Moreover, they should intimate the record date to the stock exchange at least two working days in advance.

Also, it has been proposed to add a provision allowing REITs and InvITs to call a unitholders' meeting with less than 21 days' notice.

"Instead of prior review of the statement of investor complaints by the board of directors of the manager/investment manager, such a statement shall be placed, on a quarterly basis, before the board of directors of the manager/investment manager," Sebi suggested.

The regulator proposed to revise the timeline for the submission of the statement of deviation and variation to coincide with the date of publication of the quarterly results, in line with LODR (Listing Obligations and Disclosure Requirements) Regulations.

To encourage greater participation of the unit holders in the decision-making process, irrespective of their geographical location, it has been proposed that for all unitholder meetings, the Manager of REIT/ Investment Manager of InvIT should provide an option to the unitholders to attend the meeting through video conferencing or other audio visual means. Further, the option of remote e-voting should be provided to the unitholders for all unitholder meetings.