SEBI reduces trading size of privately placed InvITs to Rs 25 lakh

Markets regulator Sebi has drastically reduced 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.

"Trading lot for the purpose of trading of units on the designated stock exchange shall be Rs 25 lakh," Sebi said in its notification dated September 26. The move came into effect the same day.

The move will help increase the liquidity of privately placed InvIT units by permitting a broader base of investors to participate in the market and boost diversification of investment portfolios.

In separate notifications, Sebi has amended its rules on infrastructure investment trusts (InvITs) and real estate investment trusts (REITs) to reduce compliance burden and facilitate ease of doing business.

Under this, Sebi has fixed the timeline 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.

The markets regulator has allowed REITs and InvITs to call a unitholders' meeting after giving shorter notice (less than 21 days) if consent is granted by writing or in electronic mode.

In case of an annual meeting, consent by at least 95 per cent of unit holders will be needed and in case of any other meeting, consent by a majority of unit holders will be required.

To encourage greater participation of unitholders in the decision-making process, Sebi said for all unitholder meetings, the manager of REIT/investment manager of InvIT will have to 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 will be provided to unitholders for all unitholder meetings.

For any issue taken up in such meetings that require approval from the unitholders, votes cast in favour of the resolution should be 50 per cent of the total votes cast for the resolution unless otherwise specified.

Sebi said 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 that are maintained electronically.

Further, the manager and the trustee will have 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.