The Securities and Exchange Board of India (“SEBI”) has issued circular no. SEBI/HO/DDHS-PoD-2/P/CIR/2023/113, and circular no. SEBI/HO/DDHS-PoD-2/P/CIR/2023/114, on July 5, 2023, (“Amending Circulars”) to amend the guidelines for institutional placement of units of listed real estate investment trusts (“ReITs”) dated November 27, 2019 (“2019 ReIT Circular”) and the guidelines for institutional placement of units of listed infrastructure investment trusts (“InvITs”) dated November 27, 2019 (“2019 InvIT Circular”), respectively.
Annexure II of the 2019 InvIT Circular and 2019 ReIT Circular, deal with the manner of institutional placement of units of a listed InvIT and ReIT respectively. Pursuant to the Amending Circulars, clause 2 of the Annexure II of both, 2019 InvIT Circular and 2019 ReIT Circular, which dealt with pricing of the unit of listed InvITs/ReITs for institutional placement, has been modified. While under the 2019 InvIT Circular and 2019 ReIT Circular, there was a distinction between pricing of frequently traded units and that of infrequently traded units, through the Amending Circulars, the pricing mechanism has been made uniform.
Going forward, the institutional placement cannot be made at a price less than the average of weekly high and low of the closing prices of the units of same class quoted on the stock exchange, during the 2 (two) preceding weeks from the ‘relevant date’. However, a relaxation by way of discount of up to 5% (five percent) may be permitted, subject to approval of the existing unitholders through a resolution.
The term relevant date has been defined to mean the date of meeting in which the board of the manager decides to open the issue.
The Amending Circulars have been made applicable with immediate effect.
This update has been contributed by Rachika Agrawal Sahay (Partner) and Mrinal Mishra (Associate).
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