Sebi eases minimum shareholding norm 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 bring out Reits.

“The reduction in the lock-in requirements for sponsors and sponsor groups from 25% to 15% of the post-issue unitholding of Reits is a step in the positive 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.

In its board meeting held Friday, the regulator also eased OFS rules to allow non-promoters such as PE investors to liquidate their holdings. Currently, only those non-promoters holding a minimus of 10% of share capital allowed to use the OFS route. Going ahead, any entity will be allowed to use the OFS route as long as it is offering shares worth at least ₹25 crore. Also, the cooling-off period between two OFS has been reduced to two weeks from 12.

In an attempt at transparency, Sebi has also approved the proposal of having Credit Rating Agencies monitor the utilisation of issue proceeds raised through preferential issues and Qualified Institutional Placement (QIP) for issue size exceeding ₹100 crore. This will enable shareholders to know the status of the utilisation of funds raised by the company as against the disclosed objective of the funds mobilised by the issuer company.

The board has approved the net-settlement between equity cash and derivatives segments. “This will enable investors to use their margins across segments and “reduce the amount of cash investors will have to bring substantially,” the regulator said in a ten-page circular on Friday.

The Board has also given a go-ahead for a new optional framework for appointment and removal of independent directors. Currently, a special resolution, which requires 75% of ‘yes’ votes, is required  to appoint or remove an independent director from a company’s board. Going ahead, companies will be allowed to do so by way of a ‘majority of minority’ vote.

Sebi board also introduced a process for winding down of clearing corporations, for facilitating online bond platforms.

Accordingly, such platforms should register as stock brokers under the debt segment with Sebi or be run by Sebi-registered brokers.

“The objective is to increase participation of the retail investors," Sebi said.

A procedural circular detailing the specifics and mechanics of the operations of the online bond platform providers will issued soon.

Sebi also made changes to regulations governing alternative investment funds (AIFs) to ensure asset managers specify the date of closure of the scheme. At present, it is more open-ended in nature.