Guidelines for rights issue of units by an unlisted Infrastructure Investment Trust (InvIT)

Last updated: 07 November 2020

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The Securities and Exchange Board of India (SEBI) has introduced new guidelines for unlisted Infrastructure Investment Trusts (InvITs) looking to raise funds through a rights issue of units. This circular outlines the conditions an InvIT must meet before making a rights issue, including board approval and ensuring no promoters or directors are fugitive economic offenders or debarred from the securities market. It also details requirements for the letter of offer, application process, unit pricing, and the manner of allotment, ensuring transparency and investor protection.

Securities and Exchange Board of India CIRCULAR SEBI/HO/DDHS/DDHS/CIR/P/2020/223 November 04, 2020 To, All Infrastructure Investment Trusts (InvITs) All Parties to InvITs Madam/Sir, Sub: Guidelines for rights issue of units by an unlisted Infrastructure Investment Trust (InvIT)

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FAQ :

A rights issue is an offer of units by an unlisted InvIT to its existing unit holders as of a specified record date, allowing them to raise further funds.

An InvIT must have board approval for the rights issue and record date, have already issued units of the same class, and ensure that its promoters, directors, or sponsors are not fugitive economic offenders or debarred from the securities market.

The investment manager, on behalf of the InvIT, must file the Letter of Offer with the Board (SEBI) at least 5 days before the issue opens.

The minimum allotment to any investor in a rights issue is INR 1 crore.

A rights issue must be open for at least three working days but no more than fifteen working days.

Units will be allotted in the dematerialised form only, and rights entitlements will be credited to the unitholders' demat accounts before the issue opens.