Sebi Cuts InvIT Allotment Lot to ₹25 Lakh, Eases Rules for REITs and Portfolio Managers

New Delhi, September 11: The Securities and Exchange Board of India (SEBI) has announced new changes in the rules regarding Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs), and portfolio managers. The fresh amendments are aimed at simplifying the current framework, and to focus more on harmonisation and ease of doing business.

Uniform Lot Size for Privately Placed InvITs

SEBI has announced the reduction of the minimum allotment lot in the primary market for privately placed InvITs. Now the minimum allotment has been reduced to ₹25 lakh, bringing it on par with the trading lot size in the secondary market. Earlier, this limit was ₹1 crore or ₹25 crore, depending on the asset mix. The uniform lot size of ₹25 lakh is expected to provide better access and consistency across both markets.

Revised Classification for Related Parties

SEBI also clarified that related parties of REITs/InvITs, and those of the sponsor, investment manager/manager, and project manager, will not be counted as “public”. The only time they can be classified as “public” is if they qualify as Qualified Institutional Buyers (QIBs).

Flexibility in Cash Flow Distribution

SEBI has now granted holding companies (holdcos) of InvITs/REITs higher flexibility in handling cash flows. If a holdco generates negative cash flows on its own, it can now adjust the negative cash flows against inflows received from underlying Special Purpose Vehicles (SPVs). They can distribute the balance amount to the trust, provided they make relevant disclosures to unitholders. Earlier, holdcos were required to pass on 100% of SPV cash flows directly.

Streamlined Compliance Timelines

SEBI has aligned the timelines for quarterly reports, valuation reports, and other mandatory filings with those for financial results. This process will now replace the deadline system which was scattered earlier with different timelines. This rule is expected to ease compliance for issuers.

Simplified Rules for Portfolio Managers

Lastly, SEBI has simplified the disclosure document format for portfolio managers. They will now be required to submit the document in a SEBI-specified format along with a certificate in Form C before signing agreements with clients.

These changes were approved by SEBI’s board earlier this year, and are now in effect. These changes are likely to improve transparency, reduce compliance burden, and support smoother capital market operations.

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