Regulation 14 - Issue and allotment of units - Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014

CHAPTER IV ISSUE AND LISTING OF UNITS Issue and allotment of units. 14. (1) A REIT shall make an initial offer of its units by way of public issue only. (2) No initial offer of units by the REIT shall be made unless,- (a) the REIT is registered with the Board under these regulations; (b) the value of 1 [the REIT assets] all the assets owned by REIT is not less than five hundred crore rupees; Explanation.- Such value shall mean the value of the specific portion of the holding of REIT in the underlying assets or 2 [holdco and/or] SPVs; 3 [(ba) the minimum number of unit holders other than sponsor(s), its related parties and its associates forming part of public shall be not less than two hundred;] 48 [ (bb) maximum subscription from any investor other than sponsor(s), its related parties and its associates shall not be more than 25 percent of the total unit capital; ] (c) 4 [***] (d) the offer size is not less than two hundred and fifty crore rupees: Provided that the requirement of ownership of assets under clause (b) and size of REIT under clause (d) may be complied 5 [at any point of time before allotment of units in accordance with offer document/placement memorandum] subject to a binding agreement with the relevant party(ies) that 6 [such] requirements shall be fulfilled prior to 7 [such] allotment of units 8 [and], a declaration to the Board and 9 [to] the designated stock exchanges to that effect and adequate disclosures in this regard in the 10 [***] offer document. 11 [(2A) For an REIT raising funds through an initial offer, the units proposed to be offered to the public through such initial offer (a) shall be not less than twenty five per cent. of the total of the outstanding units of the REIT and the units being offered by way of the offer document, if the post issue capital of the REIT calculated at offer price is less than rupees one thousand six hundred crore: Provided that the requirement at sub-clause (a) shall be complied along with the requirement under Regulation 14 (2)(d) of the REIT Regulations. (b) shall be of the value of at least ₹ 400 crore, if the post issue capital of the REIT calculated at offer price is equal to or more than rupees one thousand six hundred crore and less than rupees four thousand crore; (c) shall be not less than ten per cent. of the total of the outstanding units of the REIT and the units being offered by way of the offer document, if the post issue capital of the REIT calculated at offer price is equal to or more than rupees four thousand crore: Provided that any units offered to sponsor or the manager or their related parties or their associates shall not be counted towards units offered to the public: Provided further that any listed REIT which has public holding below twenty five per cent on account of sub-clauses (ii) and (iii) above, such REIT shall increase its public holding to at least twenty five per cent, within a period of three years from the date of listing pursuant to initial offer.] (3) Any subsequent issue of units by the REIT may be by way of follow-on offer, preferential allotment, qualified institutional placement, rights issue, bonus issue, offer for sale or any other mechanism and in the manner as may be specified by the Board. (4) REIT, through the 12 [merchant banker], shall file a draft offer document 13 [along with the fee as specified in Schedule II,] with the designated stock exchange(s) and the Board, not less than 14 [thirty] working days before filing the 15 [***] offer document with the designated stock exchange 16 [and the Board]. (5) The draft offer document filed with the Board shall be made public, for comments, if any, 17 [***] by hosting it on the websites of the Board, designated stock exchanges and merchant bankers associated with the issue 18 [, for a period of not less than twenty one days]. (6) The 19 [draft offer document and/ or offer document] shall be accompanied by a due diligence certificate signed by the 20 [***] lead merchant banker. (7) The Board may communicate its comments to the lead merchant banker and, in the interest of investors, may require the lead merchant banker to carry out such modifications in the draft offer document as it deems fit. (8) The lead merchant banker shall ensure that all comments received from the Board on the draft offer document are suitably taken into account prior to the filing of the offer document with the designated stock exchanges. (9) In case no 21 [observations] are 22 [issued] by the Board 23 [on] the draft offer document within twenty one working days from the date of receipt of satisfactory reply from the lead merchant bankers or manager, the REIT may 24 [file] the 25 [***] offer document or follow-on offer document 26 [with the Board and the exchange(s)]: 27 [***] (10) The 28 [***] offer document shall be filed with the designated stock exchanges and the Board not less than five working days before opening of the offer 29 [***]. (11) The initial offer or follow-on offer 30 [or rights issue] shall be made by the REIT within a period of not more than 31 [one year] from the date of 32 [***] issuance of observations by the Board 33 [***]: Provided that if the initial offer or follow-on offer 34 [or rights issue] is not made within the specified time period, a fresh 35 [draft] offer document shall be filed. 47 [ Provided further that the REIT shall not be required to file draft offer document with the Board in case of a fast track rights issue, subject to the fulfillment of the conditions as specified by the Board from time to time. ] (12) The REIT may invite for subscriptions and allot units to any person, whether resident or foreign: Provided that in case of foreign investors, such investment shall be subject to guidelines as may be specified by Reserve Bank of India and the government from time to time. (13) The application for subscription shall be accompanied by a statement containing the abridged version of the offer document, detailing the risk factors and summary of the terms of issue. 46 [ (14) The minimum subscription 49 [ amount ] from any investor in initial 50 [ and follow-on offer shall fall in the range of ten thousand rupees to fifteen thousand rupees ] . ] (15) Initial offer and follow-on offer shall not be open for subscription for a period of more than thirty days. (16) In case of over-subscriptions, the REIT shall allot units to the applicants on a proportionate basis rounded off to the nearest integer subject to minimum subscription amount per subscriber as specified in sub-regulation (14). (17) The REIT shall allot units or refund application money, as the case may be, within twelve working days from the date of closing of the issue. (18) The REIT shall issue units only in dematerialized form to all the applicants. (19) The price of REIT units issued by way of public issue shall be determined through the book building process or any other process in accordance with the circulars or guidelines issued by the Board and in the manner as may be specified by the Board. (20) The REIT shall refund money, - (a) to all applicants in case it fails to collect subscription amount of exceeding 36 [ninety] per cent. of the 37 [fresh] issue size as specified in the 38 [***] offer document 39 [***]; (b) to applicants to the extent of oversubscription in case the moneys received is in excess of the extent of over-subscription as specified in the 40 [***] offer document: Provided that right to retain such over subscription cannot exceed twenty five per cent. of the issue size; 41 [Provided further, that the offer document shall contain adequate disclosures towards the utilisation of such oversubscription proceeds, if any, and such proceeds retained on account of oversubscription shall not be utilised towards general purposes.] (c) to all applicants in case the number of subscribers to the initial offer forming part of the public is less than two hundred. (21) If the manager fails to allot, or list the units, or refund the money within the specified time, then the manager shall pay interest to the unit holders at fifteen per cent. per annum, till such allotment/ listing/refund and such interest shall not be recovered in the form of fees or any other form payable to the manager by the REIT. (22) Units may be offered for sale to public,- (a) if such units have been held by the existing unitholders for a period of at least one year prior to the filing of draft offer document with the Board: Provided that the holding period for the equity shares 42 [, compulsorily convertible securities (from the date such securities are fully paid-up)] or partnership interest in the 43 [holdco and/or] SPV against which such units have been received shall be considered for the purpose of calculation of one year period referred in this sub-regulation: 44 [Provided further that the compulsorily convertible securities, whose holding period has been included for the purpose of calculation for offer for sale, shall be converted to equity shares of the holdco or SPV, prior to filing of offer document.] (b) subject to other circulars or guidelines as may be specified by the Board in this regard. 45 [(22A) The amount for general purposes, as mentioned in objects of the issue in the draft offer document filed with the Board, shall not exceed Ten per cent of the amount raised by the REIT by issuance of units.] (23) If the REIT fails to make its initial offer within three years from the date of registration with the Board, it shall surrender its certificate of registration to the Board and cease to operate as a REIT: Provided that the Board, if it deems fit, may extend the period by another one year: Provided further that the REIT may later re-apply for registration, if it so desires. (24) The Board may specify by issue of guidelines or circulars any other requirements, as it deems fit, pertaining to issue and allotment of units by a REIT. *************** NOTES:- 1 Substituted for all the assets owned by REIT by the Securities and Exchange Board of India (Real Estate Investment Trusts) (Amendment) Regulations, 2018, w.e.f. 10.04.2018. 2 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 3 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 4 Omitted, by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016. Prior to its omission, sub- clause (c) read as under : the units proposed to be offered to the public is not less than twenty five per cent. of the total of the outstanding units of the REIT and the units being offered by way of the offer document: Provided that for initial offer of value greater than five hundred crore rupees, if prior to the initial offer units of the REIT are held by the public, the units proposed to be offered to the public shall be calculated after reducing such existing units for satisfying the aforesaid percentage requirement; 5 Substituted for with after initial offer by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 6 Substituted for the by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 7 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 8 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 9 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 10 Omitted initial by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 11 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 12 Substituted for manager by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 13 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 14 Substituted for twenty one by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 15 Omitted final by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 16 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 17 Omitted to be submitted to the Board, within a period of at least ten days, by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 18 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 19 Substituted for draft and final offer document by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 20 Omitted Manager and by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 21 Substituted for modifications by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 22 Substituted for suggested by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 23 Substituted for in by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 24 Substituted for issue by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 25 Omitted final by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 26 Substituted for to the public by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 27 Omitted Provided that prior to issue of such final offer document, it shall be filed with the designated stock exchanges and with the Board. by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 28 Omitted final by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 29 Omitted and such filing with the Board shall be accompanied by filing fees as specified under Schedule II by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 30 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 31 Substituted for six months by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 32 Omitted last by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 33 Omitted , if any or if no observations have been issued by the Board, within a period of not more than six months from the date of filing of offer document with the designated stock exchanges by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 34 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 35 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 36 Substituted for seventy five by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 37 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 38 Omitted initial by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 39 Omitted or follow-on offer document by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 40 Omitted initial offer document or follow-on by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 41 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 42 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017 43 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 44 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2017, w.e.f. 15.12.2017 45 Inserted by the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2016, w.e.f. 30.11.2016 46 Substituted vide Notification No. SEBI/LAD-NRO/GN/2019/09.- dated 22-04-2019 before it was read as, (14) Under both the initial offer and follow-on public offer, the REIT shall not accept subscription of an amount less than two lakh rupees from an applicant. 47. Inserted vide Notification No. SEBI/LAD-NRO/GN/2020/06 dated 02-03-2020 48. Inserted vide Notification No. SEBI/LAD-NRO/GN/2020/16 dated 16-06-2020 49. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/28 dated 30-07-2021 50. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/28 dated 30-07-2021 before it was read as and/or public offer shall be rupees fifty thousand