SEBI Chairman Ajay Tyagi said that the market regulator is working on rights issue norms for Real Estate Investment Trusts (REITs). Rights issue means an issue of shares or units offered at a special price by a company to its existing shareholders in proportion to their holding of old shares. Tyagi was speaking at the AIBI Annual Summit held today in Mumbai.
The announcement to come up with new rights issue norms comes after the SEBI released guidelines on preferential issue and institutional placement of units by a listed REIT.
The circular defined “preferential issue” as an issue of units to select persons on a private placement basis, whereas “institutional placement” means a preferential issue of units by a listed REIT to institutional investors only.
For a preferential issue of units and institutional placement of units, here are some of the key conditions that listed REITs need to follow:
- To begin with, REITs need to take approval from existing investors
- Units proposed to be allotted need to be listed on a stock exchange for a period of at least six months. In case of issuance of units through institutional placement, the minimum listing period is 12 months
- REITs have to obtain in principle approval from the stock exchanges for listing the units that are proposed to be issued
- The REIT cannot make any subsequent institutional placement until six months after the date of the earlier institutional placement
Manner of issuance of units
The units need to be allotted in the dematerialized form only and listed on the stock exchanges
Any offer or allotment through private placement has to be made to not more than 200 investors (excluding institutional investors) in a financial year
Post allotment, the REIT needs to make an application for listing of the units to the stock exchanges and the units have to be listed within seven working days from the date of allotment
If the REIT fails to list the units within the specified time, it has to refund the money collected within 20 days from the date of allotment. Post the expiry of the 20th day, the REIT needs to repay that money with 15% interest rate per annum
REIT has to file an allotment report with SEBI within seven days of allotment of the units. It has to provide details of the allotment made