Sebi invites comments on additional proposals on REITS, InvITs issuing subordinate units. Details here

livemint.com:

Securities and Exchange Board of India (Sebi) has recently invited public comments with regards to the issuance of subordinate units by REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trust). Notably, Sebi had issued a consultation paper in December last year inviting comments on the framework for issuance of subordinate units by REITs and InvITs to sponsor their associates and sponsor group. In view of the public comments received, the regulator has now decided to invite public comments on certain additional proposals.

ALSO READ: SEBI simplifies norms to access unclaimed amount in REITs, InvITs, debt securities; check details These proposals relate to the ceiling on the extent of subordinate units that can be issued, bringing uniformity in the nature of rights conferred on subordinate units and finally, dealing with changes in terms and conditions of the subordinate units post issuance. 1. Ceiling of 10% on units: The issuance of these units is meant to bridge the valuation gaps that may arise as a result of the difference in the valuation of an asset.

Typically, these valuation gaps will not be too wide or broad and hence the proposal to specify an upper ceiling up to which subordinate units can be issued. So, the Sebi has proposed that the total number of subordinate units will not exceed ten percent of the acquisition price of the asset. 2.

Inferior voting rights: The REIT subordinate units will carry only inferior voting rights compared to other units. It is, therefore, proposed to provide clarity on the nature of inferior rights which the subordinate units may carry. Now, the Sebi's proposal says that subordinate units will carry only inferior voting rights or inferior distribution