Sebi Issues Guidelines For Listed REIT On Rights Issue

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Sebi Issues Guidelines For Listed REIT On Rights Issue
Himali Patel - 20 January 2020
Mumbai, January 20: The Securities and Exchange Board of India (Sebi), issued a guideline for the rights issue of units by a listed Real Estate Investment Trust (REIT). Under the guidelines, no REIT are required to make a rights issue unless they follow a set of new guidelines. This includes a resolution of the board of directors of the manager approving the rights issue of units and determining the record date has been passed.
Further units on the same class, that are proposed to be allotted should be listed on a stock exchange before the rights issue. Under the guideline’s, REIT are also required to obtained in-principle approval of the stock exchange for the listing of the units proposed. That said, when it comes to the respective promoters, partners, directors or manager or trustee of the REIT, should not be a declared fugitive economic offender as per the Fugitive Economic Offenders Act.
“None of the respective promoters or partners or directors of the sponsor(s) or sponsor group or manager or trustee of the REIT is debarred from accessing the securities market by the Board,” noted the circular. Also, the manager on behalf of the REIT are required to appoint one or more merchant bankers, at least one of whom shall be a lead merchant banker and they are also required to appoint other intermediaries if needed in consultation with the merchant banker.
When it comes to the pricing of the units, managers in consultation with lead merchant banker, shall decide the issue price before determining the record price. Under the guidelines, the rights issue would be kept open for at least three working days but not more than fifteen working days. In the past, the market regulator has emphasised the interest several participants are showing in the emerging such as REIT as well as InvIT (infrastructure investment trusts), which represents a total asset size of more than $10 billion
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