To encourage participation in privately placed InvITs, Sebi moots slashing lot size by three-fourths

The other proposal that has been suggested for InvITs is to align provision related to change in sponsor in InvIT Regulations with REIT Regulations.

The market regulator has proposed that the lot size for trading in privately placed infrastructure investment trusts (InvITs) be reduced to a fourth.

It has also proposed that the lot size for trading in privately-placed InvITS that invest largely in completed and revenue-generating assets to an eighth of what it is currently. These have been suggested to encourage more participation in this asset class.

In a draft circular issued for ease-of-doing business for InvITs and Real-estate Investment Trusts (REITs), the Securities and Exchange Board of India (Sebi) made some suggestions, particularly for InvITs.

Comments from the public have to be sent in by May 30.

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Among them was reducing the lot size for trading in privately placed InvITs from Rs 1 crore to Rs 25 lakh and reducing the lot size for trading in privately-placed InvITs that invest in completed projects from Rs 2 crore to Rs 25 lakh.

On the rationale for the proposal, the circular stated, "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."

Among the proposals commonly suggested for REITs and InvITs are revision of timeslines for distribution to five working days from declaration; allowing unitholders meeting with shorter notice; disclosure and review of statement of investor complaints; disclosure of statement of deviation(s) alongside financial results; clarification on voting thresholds in terms of percentage, and providing electronic meeting and e-voting option to unitholders; and allowing maintenance of records in electronic form along with backup and disaster recovery norms for such records.

The other proposal that has been suggested for InvITs is to align provision related to change in sponsor in InvIT Regulations with REIT Regulations.

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The draft proposed deleting the words "with" and "without" in Regulation 22(7) of the InvIT Regulations to clarify that changes in sponsor or inducted sponsor can occur on account of either the entry of a new sponsor or the exit of existing sponsors.

The amended explanation would read as under:
"Explanation: Change in sponsor or inducted sponsor shall mean any
change due to entry of a new sponsor with or without exit of an existing
sponsor."