CIRCULAR
SEBI/HO/DDHS/DDHS/CIR/P/2018/89 June 05, 2018
To,
All Infrastructure Investment Trusts (InvITs)
All Parties to InvITs
All Stock Exchanges (other than Commodity Exchanges)
All Merchant Bankers
Dear Sir/ Madam,
Sub: Guidelines for Preferential Issue of Units by Infrastructure Investment Trusts (InvITs)
1. Regulation 2(1)(zo) of SEBI (Infrastructure Investment Trusts) Regulations, 2014 (“InvIT Regulations”) defines a preferential issue. Regulation 14(4)(b) read with Regulation 2(1)(zo) provides for any subsequent issue of units after an initial offer in a manner specified by Board from time to time. Accordingly, the detailed guidelines for preferential issue by an InvIT are provided herein.
2. Conditions for preferential issue
2.1. A listed InvIT may make preferential issue of units to an institutional investor as defined in the InvIT regulations, if it satisfies the following conditions:
2.1.1. A resolution of the unitholders of the InvIT approving the preferential issue in accordance with Regulation 22(5) of the InvIT Regulations has been passed.
2.1.2. The InvIT is in compliance with the conditions for continuous listing and disclosure obligations under the InvIT Regulations and circulars issued thereunder.
2.1.3. The InvIT is in compliance with the minimum public unitholding requirements as stipulated under Regulation 16 (6) of the InvIT Regulations.
2.1.4. No preferential issue of units by the InvIT has been made in the six months preceding the relevant date.
2.2. Preferential issue pursuant to the unitholders resolution referred to in Clause
2.1.1 shall be completed within a period of twelve months from the date of passing of the resolution.
2.3. Allotment pursuant to preferential issue shall be completed within 12 days.
2.4. The units shall be issued only in dematerialized form.
2.5. The units to be issued in preferential issue shall be of same class or kind as the units issued in the initial offer by the InvIT.
Further, such units have been listed on a recognised stock exchange, having nationwide trading terminal for a period of at least six months prior to the date of issuance of notice to its unitholders for convening the meeting to approve the preferential issue.
2.6. The minimum subscription and trading lot for the units to be issued in preferential issue shall be same as that for units issued in the initial offer by the InvIT.
2.7. The units in a preferential issue shall be offered and allotted to a minimum of two investors and maximum of 1000 investors in a financial year.
2.8. Relevant date for the purpose of preferential issue shall mean the date of the meeting in which the board of directors of the investment manager of the InvIT or the committee of directors duly authorised by the board of
directors of the investment manager of the InvIT decides to open the proposed issue.
3. Placement Document
3.1. The InvIT may appoint one or more SEBI registered intermediaries to carry
out the obligations relating to the issue.
3.2. The preferential issue of units by an InvIT shall be done on the basis of a placement document, which shall contain disclosures as specified in Annexure I.
3.3. The placement document shall be serially numbered and copies shall be circulated only to select investors subject to compliance with clause 2.7 above.
3.4. The InvIT shall, while seeking in-principle approval from the recognised stock exchange, furnish a copy of the placement document, a certificate issued by its merchant banker or statutory auditor confirming compliance with the provisions of these Guidelines along with any other documents required by the stock exchange.
3.5. The placement document shall also be placed on the website of the concerned stock exchange and the InvIT with a disclaimer to the effect that it is in connection with a preferential issue and that no offer is being made to the public or to any other investor.
3.2. The preferential issue of units by an InvIT shall be done on the basis of a placement document, which shall contain disclosures as specified in Annexure I.
3.3. The placement document shall be serially numbered and copies shall be circulated only to select investors subject to compliance with clause 2.7 above.
3.4. The InvIT shall, while seeking in-principle approval from the recognised stock exchange, furnish a copy of the placement document, a certificate issued by its merchant banker or statutory auditor confirming compliance
with the provisions of these Guidelines along with any other documents required by the stock exchange.
3.5. The placement document shall also be placed on the website of the concerned stock exchange and the InvIT with a disclaimer to the effect that it is in connection with a preferential issue and that no offer is being made to the public or to any other investor.
4. Pricing
4.1. The preferential issue shall be made at a price not less than the average of the weekly high and low of the closing prices of the units quoted on the tock exchange during the two weeks preceding the relevant date.
Explanation: For the purpose of this clause, the term “stock exchange” means any of the recognised stock exchanges on which the units of the InvIT are listed and on which the highest trading volume in such units has been recorded during the two weeks immediately preceding the relevant date.
4.2. The InvIT shall not allot partly paid-up units.
4.3. The prices determined for preferential issue shall be subject to appropriate adjustments, if the InvIT:
4.3.1. makes a rights issue of units
4.3.2. is involved in such other similar events or circumstances, which in the opinion of the concerned stock exchange, requires adjustments.
5. Restriction on allotment
5.1. No allotment shall be made, either directly or indirectly, to any party to the InvIT or their related parties except to the sponsor only to the extent that is required to ensure compliance with regulation 12 (3) of the InvIT
Regulations.
Explanation: To determine the “related parties”, the term related party as defined under the InvIT Regulations shall be applicable. However, Mutual Funds, Insurance Companies and Pension Funds shall not be treated as related parties for the purpose of clause 5.1 above.
5.2. The applicants in preferential issue shall not withdraw their bids after the closure of the issue.
6. Transferability of Units
6.1. The units allotted under preferential issue shall not be sold by the allottee for a period of one year from the date of allotment, except on a recognised stock exchange.
7. This circular is being issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, Regulation 33 of the InvIT Regulations.
8. This Circular is available on the website of the Securities and Exchange Board of India (“SEBI”) at www.sebi.gov.in und-er the category “Legal” and under the drop down “Circulars”.
Yours faithfully,
Barnali Mukherjee
Chief General Manager
Department of Debt and Hybrid Securities
Tel. No.: +91 22 2644 9660
E-mail ID: barnalim@sebi.gov.in
