Guidelines for InvITs

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2011
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The Securities and Exchange Board of India (SEBI) has introduced guidelines for listed infrastructure investment trusts (InvITs) registered under the SEBI (Infrastructure Investment Trusts) Regulations, 2014, allowing institutional investors to raise capital by way of a preferential issue. “Preferential issue” (PI) is defined under the InvIT regulations to mean an issue of units by a listed InvIT to any select person or group of persons on a private placement basis, and does not include an offer of units made through a public issue, rights issue, bonus issue, qualified institutional placement or any other issue as may be specified by SEBI. The following are some features of note.

Conditions. (1) A resolution by the unitholders of the InvIT approving the PI should be passed in accordance with the provisions of the InvIT regulations. (2) The PI must be completed within 12 months from the date of passing of the resolution mentioned above, following which, the allotment should be completed within 12 days. (3) Conditions for continuous listing and disclosure obligations under the InvIT regulations and circulars must be complied with. (4) Minimum public unit holding requirements under the InvIT regulations must be complied with. (5) The InvIT must not have made a PI in the six months preceding the date of the meeting in which opening of the proposed issue is decided. (6) Units issued in a PI must be of the same kind as the units issued in the initial offer by the InvIT, and only in dematerialized form. (7) Such units must have been listed on a recognized stock exchange for at least six months prior to the date of issuance of notice to the unitholders for convening the meeting to approve the PI. (8) Units in a PI must be offered and allotted to a minimum of two investors and maximum of 1,000 investors in a financial year.

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The business law digest is compiled by Nishith Desai Associates (NDA). NDA is a research-based international law firm with offices in Mumbai, New Delhi, Bengaluru, Singapore, Silicon Valley, Munich and New York. It specializes in strategic legal, regulatory and tax advice coupled with industry expertise in an integrated manner.

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