SEBI Prescribes Various Methods for REITs & InvITs to Achieve a Minimum 25% Public Unitholding

Circular No. SEBI/HO/DDHS/PoD2/P/CIR/2023/106 & 107, Dated 27.06.2023

Regulation 14(1A) of SEBI (Infrastructure Investment Trusts) Regulations, 2014 and Regulation 14(2A) of SEBI (Real Estate Investment Trusts) Regulations, 2014 mandates every listed REIT and InvIT which has public unitholding below 25%, shall increase its public unitholding to at least 25% within a period of three years from the date of listing of units pursuant to initial offer.

In order to achieve this, SEBI has prescribed the method of achieving minimum public unitholding of 25% by Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

Some of the methods allowed for achieving minimum public unitholding:

1. Public Offer

REITs and InvITs can Issue units to public through issuance of offer document for achieving minimum public unitholding.

2. Offer for sale through issuance of offer document

REITs and InvITs can issue units to public through offer for sale of units held by Sponsor(s)/Manager (Investment manager in case of InvIT)/and their associates/related parties and Sponsor Group.

3. Offer for sale through the stock exchange mechanism

REITs and InvITs can issue units in the secondary market through offer for sale of units held by Sponsor(s)/Manager (Investment manager in case of InvIT)/and their associates/related parties and Sponsor Group through the Stock Exchange mechanism i.e., the secondary market.

4. Rights issue to public unitholders

REITs and InvITs can Issue units to public through right issue subject to the condition that sponsors, managers (Investment managers in case of InvIT), and related parties voluntarily waive their unit entitlements in support of the Issue.

5. Allotment of units under Institutional placement

REITs and InvITs can Issue units to public through making allotment of units under Institutional placement for complying with the requirement of minimum public shareholding.

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