Sebi relaxes minimum shareholding standard for Reit sponsors

MUMBAI: The Securities and Exchange Board of India (Sebi) has reduced the minimum holding requirement of Real Estate Investment Trust (Reits) units by sponsors to 15% from 25%. This will encourage more companies to set up REITs.

“Reducing the lock-in requirements for sponsors and groups of sponsors from 25% to 15% of Reits post-issuance unit holdings is a step in the right direction by Sebi. We believe this will encourage developers and investors to monetize their assets through a Reit structure,” said Kranti Mohan, Partner, Capital Markets, Cyril Amarchand Mangaldas.

At its board meeting on Friday, the regulator also relaxed OFS rules to allow non-sponsors such as private equity investors to liquidate their holdings. Currently, only non-promoters holding a minimum of 10% of the share capital are authorized to use the OFS route. Going forward, any entity will be allowed to use the OFS route as long as it offers shares worth at least 25 crore. Also, the withdrawal period between two OFS has been reduced to two weeks instead of 12.

In a bid for transparency, Sebi also endorsed the proposal to have credit rating agencies monitor the use of issue proceeds through preferred issues and Qualified Institutional Placement (QIP) for issue size. emissions exceeding 100 crore. This will allow shareholders to know the status of the use of funds raised by the company against the stated purpose of the funds raised by the issuing company.

The Board of Directors has approved the net settlement between the Equity Cash and Derivatives segments. “This will allow investors to use their margins across all segments and ‘significantly reduce the amount of cash investors will need to bring in’,” the regulator said in a 10-page circular on Friday.

The Board also gave its green light to a new optional framework for the appointment and removal of independent directors. Currently, a special resolution, which requires a 75% “yes” vote, is required to appoint or remove an independent director from a company’s board. In future, companies will be allowed to do this through a “majority of the minority” vote.

Sebi’s board has also introduced a clearing company liquidation process, to facilitate online bond platforms.

Accordingly, these platforms should register as securities brokers in the debt segment with Sebi or be managed by brokers registered with Sebi.

“The goal is to increase retail investor participation,” Sebi said.

A procedural circular detailing the specifics and mechanisms of the operations of online bond platform providers will be published shortly.

Sebi has also made changes to the regulations governing alternative investment funds (AIFs) to ensure that asset managers specify when the regime ends. Currently, it is more open in nature.

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