The Securities and Exchange Board of India (SEBI) has proposed lowering the minimum trading lot size for privately placed infrastructure investment trusts (InvITs) from the current INR 1-2 crore to INR 25 lakh. This aims to increase liquidity in the secondary market for InvIT units by allowing more individual and retail investors to participate. A smaller lot size would help diversify investment portfolios and better manage risks. In addition, SEBI has put forth several measures to reduce compliance burden for InvITs and real estate investment trusts (REITs), including setting a timeline of 5 days for profit distributions and giving flexibility to set record dates with 2 days' notice to exchanges.
The markets regulator SEBI has proposed reducing the minimum trading lot size for privately placed infrastructure investment trusts (InvITs) to boost investor participation and increase liquidity.
Currently, the minimum lot size for secondary market trading of privately placed InvITs is INR 1 crore. If the InvIT invests at least 80% of its assets in revenue-generating projects, the minimum is INR 2 crore.
However, in a consultation paper, SEBI has proposed lowering the minimum lot size to INR 25 lakh. This would increase liquidity by allowing more investors to participate in trading InvIT units. It would also help diversify investment portfolios and better manage risks.
In addition, SEBI has proposed measures to reduce compliance burden and facilitate ease of doing business for InvITs and real estate investment trusts (REITs).
Some key proposals include fixing the time for distributing profits to unitholders at 5 working days from the date of declaration. The move is expected to bring efficiency to the distribution process and will aid in making funds available to investors within a relatively shorter period of time.
Flexibility would be given to REIT/InvIT managers to set record dates for distributions, by informing exchanges at least 2 working days in advance.
REITs/InvITs may also call unitholder meetings with less than 21 days' notice.
Statements of investor complaints would be placed before manager/investment manager boards quarterly, instead of prior review. The regulator proposed to revise the timeline for the submission of the statement of deviation and variation to coincide with the date of publication of the quarterly results, in line with LODR (Listing Obligations and Disclosure Requirements) Regulations.
To encourage greater participation of the unit holders in the decision- making process, irrespective of their geographical location, it has been proposed that for all unitholder meetings, the Manager of REIT/ Investment Manager of InvIT should provide an option to the unitholders to attend the meeting through video conferencing or other audio-visual means. Further, the option of remote e-voting should be provided to the unitholders for all unitholder meetings
SEBI has sought public comments on the proposals by May 30th.
The various proposals around reducing minimum lot sizes, streamlining processes and facilitating remote participation in meetings are expected to provide greater ease of access and participation for retail investors in InvITs and REITs. This will help boost overall liquidity and trading activity, as SEBI seeks to further improve the framework governing these investment vehicles.
Advertisement
Facebook
Whatsapp
