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SEBI puts in place framework to provide exit option to dissenting unitholders of REITs, InvITs

Upon receipt of public notice, investment manager will immediately but not later than 24 hours provide the list of dissenting unit holders to the lead manager.

July 17, 2020 / 09:38 PM IST

Markets regulator Sebi on Friday came out with a mechanism to provide exit option to dissenting unitholders of emerging investment vehicles REITs and InvITs. Sebi said the acquirer will facilitate tendering of units by the unitholders and settlement of the same through the stock exchange mechanism for the purpose of takeover, buy-back and delisting in case of equity listed companies.

An acquirer providing exit option to dissenting unitholders of REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) needs to appoint one or more merchant bankers as lead manager(s) for the exit offer, Sebi said in two separate circulars.

The acquirer through the lead manager will give a public notice to stock exchange(s) and investment manager regarding his intention of providing exit option to dissenting unit holders.

Upon receipt of public notice, investment manager will immediately but not later than 24 hours provide the list of dissenting unit holders to the lead manager.

Sebi said the acquirer, through the lead manager, will send the Letter of Offer (LoF) to all dissenting unit holders within three days of public notice and file a copy of the same with the stock exchanges.


Further, the lead manager will exercise due diligence with regard to all information and disclosures contained in the LoF. Thereafter, the stock exchanges will disseminate the LoF on its website as soon as it receives the same.

The letter of offer will comprise details of the acquirer (including persons acting in concert (PAC), if any), its background, experience, areas of operation, relationship between acquirers, pre and post-exit offer unit holding, financial position, details of the exit option as well as the exit price.

The lead manager will submit a report to the investment manager that the payment has been duly made to all the dissenting unit holders whose units have been accepted in the exit option.

Based on the information received from lead manager, Sebi said the investment manager will update the aggregate number of units tendered, accepted, payment of the consideration and the post-exit option unit holding pattern of the InvIT or REIT with stock exchanges.

Upon completion of the exit option process, the due diligence certificate needs to be filed by the lead manager with the board within two working days of payment of consideration by the acquirer, the regulator noted.

Also, the regulator has provided a methodology to calculate the exit price.

The manager will be entitled to receive from the acquirer all expenses incurred and payable to external agencies related to the exit offer process.

The regulator said units tendered in exit option will be in multiples of the trading lot as applicable to the units of the same class of the REIT or InvIT.

Dissenting unitholders who are unitholders on the cut-off date for the purpose of voting will be eligible to avail the exit option only in respect of such number of units held by such unitholders on the cut-off date.
first published: Jul 17, 2020 09:37 pm

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