To make REITs and InvITs more appealing to retail investors, the markets regulator SEBI cut the minimum application value and changed the trading lot to one unit for these developing investment vehicles. SEBI stated in two different notices dated 30th July that the minimum application value for both REITs and InvITs has been reduced to Rs. 10,000-15,000, contrasted to the previous threshold of rupees fifty thousand for REITs and rupees one lakh for InvITs.
Any allocation to an investor must be made in multiples of a lot. Previously, a trading lot of 100 units was required for initial listing. The action by the SEBI will result in improved liquidity and effective price discovery, as well as an appealing prospect for individual investors to receive steady returns with potenStandardisation.
In addition, for unlisted InvITs, the regulator has imposed a minimum unit holder requirement. “At all times, the minimum number of unitholders in an InvIT, other than the sponsor(s), its associated parties, and its associates shall be five, holding at least 25% of the total units of the InvIT,” SEBI stated. The regulator went on to say that a unit holder’s associates and connected parties will be treated as a single unit holder.
Further Key Takeaways
In the Indian context, REITs and InvITs are relatively new financial products, yet they are immensely popular in worldwide markets. While a REIT has a portfolio of commercial real estate, the majority of which is already leased, an InvIT owns infrastructure assets such as motorways and power transmission lines.
There were 15 InvITs and four REITs registered as of the end of March. On the stock exchanges, six InvITs and three REITs were listed. The funds were raised through the original offer, preferred issue, institutional placement, and rights issues, among other methods. In a second notification, Sebi authorised non-scheduled banks to act as bankers for such offerings, allowing investors to participate in public/rights offers through a variety of payment methods.
It was also said that the new rules went into force on July 30. The notices follow the approval of proposals by the SEBI board in late June.
Is SEBI’s Planned Unified MF Platform Making It Easier For Individual Investors To Invest?
SEBI issued a circular last week requesting mutual funds (MFs) to create an interoperable platform. Consider the following scenario: you’ve recently relocated to a new location. You have ten mutual fund schemes in which you have invested. For example, suppose you want to modify the beneficiary of your existing mutual fund investments.
Currently, you must approach each entity separately, as different fund houses will have different methods. The new shared platform is likely to be extremely helpful in these situations, as you will just have to deal with one point of contact for all of your service needs.
Resolutions In A Single Spot
You will only have to make your desired change once for all non-commercial upgrades (service requests). To begin, you will have access to approximately 18 distinct non-commercial transactions, with approximately 50-60% of them being resolved in real time. There may be some time lag and back-and-forth with the asset manager for some complex queries and requests.
Some of the most complicated issues, such as asset transmission, may still necessitate direct communication with asset management. Commercial transactions between asset managers can also be done in one transaction.
The new platform will be available to investors only in the first phase, and afterwards distributors and advisors will be able to use it. You don’t need to make any changes if you currently invest through a digital platform or through a distributor/advisor. If you want to, you can sign up for this new platform. Your existing transaction method and your account on the new platform can coexist. The integrated, single-point, and real-time transaction access across asset managers will be a benefit of registering.
Formats That Are Standardised
You and your distributor will no longer have to worry about different asset managers’ formats and processes. For every business or non-commercial transaction, you only need to familiarise yourself with the process described on this platform.
Standardization of procedures is required in order for dedicated receipts to be initiated across asset managers. Also, each asset manager must follow the same procedure for changing nominee information or repatriating unclaimed dividends. At the moment, asset managers’ practises are neither uniform nor standardised, particularly for non-commercial transactions.