Regulation 17B - Issuance of Subordinate Units - Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014

1 [Issuance of Subordinate Units. 17B. (1) The subordinate units shall only be issued by a privately placed InvIT upon acquisition of an infrastructure project. (2) The subordinate units shall be issued only to the sponsor, its associates and the sponsor group and shall be deemed to be a part of the consideration for acquisition of the infrastructure project from such sponsor, its associates and the sponsor group. (3) The subordinate units shall not carry any voting rights or distribution rights. (4) The subordinate units shall be issued in a dematerialized form with an International Securities Identification Number, distinct from that of the ordinary units. (5) The subordinate units shall be listed on a recognised stock exchange after their reclassification into ordinary units in accordance with the provisions contained in these regulations. (6) The subordinate units may be issued by way of an initial offer or any offer subsequent to the initial offer, either along with the issue of ordinary units or without the issue of ordinary units. (7) The issue of subordinate units made after the initial offer by the InvIT shall require the approval of the unitholders where votes cast in favour of the resolution shall not be less than one and a half times the votes cast against the resolution: Provided that any unitholder who is party to the acquisition of the infrastructure project including the sponsor, its associates and sponsor group, shall not be entitled to vote. (8) The price of subordinate units shall be determined according to the pricing guidelines applicable for issuance of ordinary units. (9) Prior to issuance of subordinate units, the investment manager shall obtain in-principle approval from the recognised stock exchange for listing of such subordinate units after their reclassification into ordinary units. (10) The enabling provisions authorising the issuance of subordinate units shall be specified in the Trust Deed. (11) The investment manager shall disclose the terms and conditions governing subordinate units in the Term Sheet. (12) The investment manager shall disclose the impact of potential reclassification of subordinate units into ordinary units in the Term Sheet in such manner as may be specified by the Board. (13) The investment manager shall disclose the Term Sheet in the placement memorandum, the explanatory statement to the notice for unitholders meeting as well as any document which may be disclosed to investors including prospective investors. (14) The InvIT shall also disclose the Term Sheet, the placement memorandum and the notice for unitholders meeting including the explanatory statement on its website and shall file the same with the recognised stock exchange. (15) The amount of subordinate units issued at the time of acquisition of an infrastructure project by the InvIT shall not exceed ten percent of the acquisition price of the infrastructure project. (16) The total number of outstanding subordinate units issued by an InvIT at any point of time shall not exceed ten percent of the total number of outstanding ordinary units issued by such InvIT: Provided that an InvIT which has subordinate units outstanding exceeding the above limit, as on the date of notification of this chapter, such InvIT may issue additional subordinate units subject to compliance with the above limit: Provided further that for the purpose of compliance with the above limit, all outstanding subordinate units shall be considered including the subordinate units issued prior to the date of the notification of this chapter. (17) The terms and conditions of the subordinate units shall not be varied after their issuance, except in accordance with the provisions of this chapter. ] **************** NOTES:- 1. Inserted vide Notification No. SEBI/LAD-NRO/GN/2024/182 dated 27-05-2024