Regulation 22 - Rights and meetings of unit holders - Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014

CHAPTER VI RIGHTS OF UNIT HOLDERS, GENERAL OBLIGATIONS, DISCLOSURES AND REPORTING Rights and meetings of unit holders 22. (1) The unit holder shall have the rights to receive income or distributions as provided for in the offer document or placement memorandum. (2) With respect to any matter requiring approval of the unit holders,- (a) a resolution shall be considered as passed when the votes cast by unit holders, so entitled and voting, in favour of the resolution exceed a certain percentage as specified in these regulations, of 22 [ total votes cast ] ; 23 [ (aa) the voting threshold specified under these regulations shall be calculated on the basis of unit holders present and voting. Explanation. The unit holders voting through the electronic voting facility and postal ballot shall be counted for the determination of unit holders present and voting; ] (b) the voting may also be done by postal ballot or electronic mode; (c) a notice of not less than twenty one days shall be provided to the unit holders 24 [ : ] 25 [ Provided that a meeting of unit holders may be called after giving shorter notice than that specified in this clause if consent, in writing or by electronic mode, is accorded thereto - i. in case of an annual meeting, by not less than ninety-five percent of the unit holders entitled to vote thereat; and ii. in case of any other meeting, by majority of the unitholders in number entitled to vote thereat and who represent not less than ninety-five percent of such part of the units by value as gives a right to vote at the meeting. ] (d) voting by any person who is a related party in such transaction as well as associates of such person(s) shall not be considered on the specific issue; (e) investment manager shall be responsible for all the activities pertaining to conducting of meeting of the unit holder, subject to overseeing by the trustee: Provided that in issues pertaining to the investment manager such as change in investment manager including removal of the investment manager or change in control of the investment manager, trustee shall convene and handle all activities pertaining to conduct of the meetings: Provided further that in respect of issues pertaining to the trustee Including change in the trustee, the trustee shall not be involved in any manner in the conduct of the meeting. 26 [ (f) for all unit holder meetings, the investment manager shall provide an option to the unit holders to attend the meeting through video conferencing or other audio visual means and the option of remote electronic voting in the manner as may be specified by the Board. ] (3) 1 [For an] InvITs, (a) an annual meeting of all unit holders shall be held not less than once a year within one hundred twenty days from the end of financial year and the time between two meetings shall not exceed fifteen months; (b) with respect to the annual meeting of unit holders, (i) any information that is required to be disclosed to the unit holders and any issue that, in the ordinary course of business, may require approval of the unit holders may be taken up in the meeting including, (1) latest annual accounts and performance of the InvIT; (2) approval of auditor and fees of such auditor, as may be required; (3) latest valuation reports; (4) appointment of valuer, as may be required; (5) any other issue; (ii) for any issue taken up in such meetings which require approval from the unit holders 27 [ , votes cast in favour of the resolution shall be more than fifty per cent of the total votes cast for the resolution unless otherwise specified under these regulations ] ; (4) In case of, (a) any approval from unit holders required under regulation 18, 19 and 21; (b) any transaction, other than any borrowing, value of which is equal to or greater than twenty five per cent. of the InvIT assets; 6 [ (c) any borrowing in terms of the limit specified under clause (a) of sub-regulation (3) of regulation 20 ] (d) any issue of units after 3 [ initial public offer by an InvIT] , in whatever form, other than any issue of units which may be considered by the Board under sub-regulation (5); (e) increasing period for compliance with investment conditions to one year in accordance with clause (c) of sub-regulation (5) of regulation 18; (f) any issue, in the ordinary course of business, which in the opinion of the sponsor(s) or trustee or investment manager, is material and requires approval of the unit holders, if any; 16 [****] (g) any issue for which the Board or the designated stock exchanges requires such approval under this sub-regulation, approval from unit holders shall be required where votes cast in favour of the resolution shall 4 [be more than] 28 [ fifty per cent of the total votes cast for ] the resolution. (5) In case of, (a) any change in investment manager including removal of the investment manager or change in control of the investment manager; (b) any material change in investment strategy or any change in the management fees of the InvIT; (c) the 7 [****] 8 [ trustee and ] investment manager proposing to seek delisting of units of the InvIT 9 [ under clause (e) of sub-regulation (1) of regulation 17 ] (d) any issue, not in the ordinary course of business, which in the opinion of the sponsor(s) or investment manager or trustee requires approval of the unit holders; (e) any issue for which the Board or the designated stock exchanges requires approval under this sub-regulation; (f) any issue taken up on request of the unit holders including, (i) removal of the investment manager and appointment of another investment manager to the InvIT; (ii) removal of the auditor and appointment of another auditor to the InvIT; (iii) removal of the valuer and appointment of another valuer to the InvIT; (iv) delisting of an InvIT, if the unit holders have sufficient reason to believe that such delisting would act in the interest of the unit holders; (v) any issue which the unit holders have sufficient reason to believe that is detrimental to the interest of the unit holders; (vi) change in the trustee if the unit holders have sufficient reason to believe that acts of such trustee is detrimental to the interest of the unit holders, 21 [ (g) introduction of unit based employee benefit scheme after an initial offer; (h) unit based employee benefit scheme proposed at the time of initial offer; Explanation. For any unit based employee benefit scheme proposed at the time of initial offer, the investment manager shall obtain the approval of the unitholders on such proposed scheme after listing of the InvIT and shall ensure that the scheme is not implemented until such approval is obtained; (i) acquisition of units by the employee benefit trust as specified in sub-regulation (3) of regulation 17I: Provided that approval by way of a separate resolution shall be required in case of secondary acquisition and such approval shall mention the percentage of secondary acquisition that could be undertaken subject to the limits specified under regulation 17J: (j) issuance of units to the employee benefit trust as specified in clause (a) of sub-regulation (1) of regulation 17I; (k) transfer of units to the employee benefit trust as specified in clauses (b) and (c) of sub-regulation (1) of regulation 17I; (l) a separate resolution that shall be required for grant of options to identified employees, during any one year, equal to or exceeding one per cent of the unit capital of the InvIT at the time of grant of options; (m) variation of the terms of the unit based employee benefit scheme including repricing of the options; ] approval from unit holders shall be required where votes cast in favour of the resolution shall 29 [ be at least sixty per cent of total votes cast for the resolution. ] : 12 [ **** ] 10 [ (5A) In case of any borrowing by an InvIT in terms of the limit specified in clause (b) of sub-regulation 3 of regulation 20, the approval from seventy five per cent. of the unit holders by value shall be obtained. 15 [ **** ]] 13 [ (5C) No person, other than sponsor(s), its related parties and its associates, shall acquire units of an InvIT which taken together with units held by such person and by persons acting in concert with such person in such InvIT, exceeds twenty-five per cent of the value of outstanding InvIT units unless approval from seventy five per cent. of the unit holders by value excluding the value of units held by parties related to the transaction, is obtained: Provided that if the required approval is not received, the person acquiring the units shall provide an exit option to the dissenting unit holders to the extent and in the manner as may be specified by the Board. ] (6) With respect to the right(s) of the unit holders under clauses (f) of sub-regulation (5), (a) not less than twenty five per cent. of the unit holders by value, other than any party related to the transactions and its associates, shall apply, in writing, to the trustee for the purpose; (b) on receipt of such application, the trustee shall require the issue with the investment manager to place the issue for voting in the manner as specified in these regulations; (c) with respect to sub-clause (vi), not less than sixty per cent. of the unit holders by value shall apply, in writing, to the trustee for the purpose. 14 [ (7) In case of any change in sponsor or inducted sponsor or change in control of sponsor or inducted sponsor 17 [ or conversion to Self-Sponsored Investment Manager ] , - (a) prior to such change, approval from seventy five per cent. of the unit holders by value excluding the value of units held by parties related to the transaction shall be obtained (b) if the required approval is not received,- (i) in case of change of sponsor or inducted sponsor, the proposed inducted sponsor shall provide the dissenting unit holders an option to exit by buying their units in the manner specified by the Board; (ii) in case of change in control of the sponsor or inducted sponsor, the said sponsor or inducted sponsor shall provide the dissenting unit holders an option to exit by buying their units in the manner specified by the Board; 18 [ (iii) in case of conversion to Self-Sponsored Investment Manager, the Investment Manager shall provide the dissenting unit holders an option to exit by buying their units in the manner specified by the Board; ] Explanation: Change in sponsor or inducted sponsor shall mean any change due to entry of a new sponsor 30 [ or ] exit of an existing sponsor. ] 19 [ (8) The existing sponsor(s) proposing to disassociate as sponsor(s) by seeking to convert the Investment Manager to Self-Sponsored Investment Manager shall comply with the following conditions: (i) the InvIT has been listed for a period of at least five years; (ii) the InvIT has undertaken not less than twelve distributions on a continuous basis and has complied with the distribution norms as per these Regulations in the preceding five years; (iii) the InvIT is rated AAA by a registered credit rating agency for a continuous period of five years immediately preceding the exit of the sponsor; (iv) during the period of preceding five years, the InvIT has not breached, at any time, the maximum leverage thresholds specified in these regulations; (v) the Investment Manager is meeting the net worth criteria specified for the sponsor in these regulations; (vi) the minimum unitholding requirement applicable to sponsor(s) and sponsor group(s) shall be complied with, on or after the date of conversion of the Investment Manager to Self-Sponsored Investment Manager, by the Investment Manager, shareholders of the Investment Manager and/or group entities of Investment Manager; Explanation: Investment Manager, shareholders of the Investment Manager and/or group entities of Investment Manager may acquire units of the InvIT for the purpose of compliance of above condition. (vii) the sponsor(s) or its associate(s) do not own or control the Investment Manager of the InvIT on or after the date of conversion of the Investment Manager to Self-Sponsored Investment Manager; (viii) the sponsor has not transferred / sold assets to the InvIT in the last three years and no assets/ projects shall be acquired by the InvIT from the outgoing sponsor(s) for a period of one year from the date of conversion to Self-Sponsored Investment Manager; (ix) at least one of the sponsor(s) proposing to disassociate should have been a sponsor of the InvIT for a minimum period of five years; (x) the InvIT shall not have any under-construction assets acquired from the sponsor that have not commenced commercial operations; (xi) the sponsor(s) or its associate(s) are not the Project Manager and do not own or control the Project Manager on or after the date of conversion of the Investment Manager to Self-Sponsored Investment Manager; (xii) unitholders approval in terms of sub-regulation (7) of this regulation and consent of the Trustee has been obtained for conversion to Self-Sponsored Investment Manager; 20 [ (xiia) there are no outstanding subordinate units; and ] (xiii) such other conditions as may be specified by the Board. ] *************** NOTES:- 1 Substituted for With respect to publicly offered by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 2 Substituted for not be less than one and a half times by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 3 Substituted for initial offer by a publicly offered InvIT by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 4 Substituted for not be less than one and half times by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 5 Substituted for three by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 6. Substituted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/10 dated 22-04-2019 before it was read as, (c) any borrowing in excess of specified limit as required under sub-regulation (2) of regulation 20; 7. Omitted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/10 dated 22-04-2019 before it was read as sponsor(s) or 8. Inserted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/10 dated 22-04-2019 9. Inserted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/10 dated 22-04-2019 10. Inserted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/10 dated 22-04-2019 11. Inserted vide Notification No. SEBI/LAD-NRO/GN/2020/15 dated 16-6-2020 12. Omitted vide Notification No. SEBI/LAD-NRO/GN/2020/15 dated 16-6-2020 before it was read as, Provided that in case of clause (d), if approval is not obtained, the person shall provide an exit option to the unit holder to the extend and in the manner specified by the Board. 13. Inserted vide Notification No. SEBI/LAD-NRO/GN/2020/15 dated 16-6-2020 14. Inserted vide Notification No. SEBI/LAD-NRO/GN/2020/15 dated 16-6-2020 15. Omitted vide Notification No. SEBI/LAD-NRO/GN/2022/101 dated 09-11-2022 w.e.f. 01-01-2023 before it was read as, , (5B) For delisting of units of InvIT in terms of clause (ea) of sub-regulation (1) of regulation 17, approval from not less than ninety per cent. of the unit holders by value shall be required and exit shall be provided to dissenting unit holders. 16. Omitted vide Notification No. SEBI/LAD-NRO/GN/2023/145 dated 16-08-2023 before it was read as, 11 [ (fa) de-classification of the status of sponsor; ] 17. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/145 dated 16-08-2023 18. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/145 dated 16-08-2023 19. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/145 dated 16-08-2023 20. Inserted vide Notification No. SEBI/LAD-NRO/GN/2024/182 dated 27-05-2024 21. Inserted vide Notification No. SEBI/LAD-NRO/GN/2024/192 dated 09-07-2024 22. Substituted vide Notification No. SEBI/LAD-NRO/GN/2024/207 dated 26-09-2024 w.e.f. 26-09-2024 before it was read as, votes cast against 23. Inserted vide Notification No. SEBI/LAD-NRO/GN/2024/207 dated 26-09-2024 w.e.f. 26-09-2024 24. Substituted vide Notification No. SEBI/LAD-NRO/GN/2024/207 dated 26-09-2024 w.e.f. 26-09-2024 before it was read as, ; 25. Inserted vide Notification No. SEBI/LAD-NRO/GN/2024/207 dated 26-09-2024 w.e.f. 26-09-2024 26. Inserted vide Notification No. SEBI/LAD-NRO/GN/2024/207 dated 26-09-2024 w.e.f. 26-09-2024 27. Substituted vide Notification No. SEBI/LAD-NRO/GN/2024/207 dated 26-09-2024 w.e.f. 26-09-2024 before it was read as, other than as specified in sub-regulation (6) under, votes cast in favour of the resolution shall 2 [ be more than] the votes cast against the resolution 28. Substituted vide Notification No. SEBI/LAD-NRO/GN/2024/207 dated 26-09-2024 w.e.f. 26-09-2024 before it was read as, the votes cast against 29. Substituted vide Notification No. SEBI/LAD-NRO/GN/2024/207 dated 26-09-2024 w.e.f. 26-09-2024 before it was read as, not be less than 5 [one and a half] times the votes cast against the resolution 30. Substituted vide Notification No. SEBI/LAD-NRO/GN/2024/207 dated 26-09-2024 w.e.f. 26-09-2024 before it was read as, with or without