TaxTMI 
TaxTMI 
Master Circular for Real Estate Investment Trusts (REITs)
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.... 3. In case of any inconsistency between the master circular and the applicable circulars, the contents of the relevant circular shall prevail. Yours faithfully, Deena Venu Sarangadharan Deputy General Manager Department of Debt and Hybrid Securities Tel no.: 022-26449266 Email: [email protected] ============= Document 1 Table of Contents Chapter 1. Online Filing System for REITS -----------………… Chapter 2. Guidelines for public issue of units of REITs......... Chapter 3. Disclosure of financial information in offer document for REITs. Chapter 4. Continuous Disclosures and Compliances by REITs... Chapter 5. Participation by Strategic Investor(s) in REITs Chapter 6. Guidelines for issuance of debt securities by REITS........ 3 4 18 37 ........ 52 54 Chapter 7. Guidelines for preferential issue and institutional placement of units by listed REITs………………………....... Chapter 8. Guidelines for rights issue of units by a listed REIT . 56 ------------ 65 Chapter 9. Encumbrance on units of REITS....... .74 Ch....
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....osed in the offer document. 2.2. Filing of offer document 2.2.1. Draft offer document, offer document and final offer document shall mean as under: a) Draft offer document refers to the draft of the offer document filed with the Board and the stock exchanges. b) Offer document refers to the version of the offer document filed with the Board and the stock exchanges incorporating all updations except the price / price band. c) Final offer document refers to the version of the offer document filed with the Board and the stock exchanges including details with respect to pricing, allotment etc. 2.2.2. The draft offer document shall be filed with the Board and the designated stock exchanges in accordance with REIT Regulations. 2.2.3. The lead merchant bankers shall submit the following to the Board along with the draft offer document: a) a certificate, confirming that an agreement has been entered into between the Manager on behalf of the REIT and the lead merchant bankers; 2 Circular No. CIR/IMD/DF/136/2016 dated December 19, 2016 Page 4 of 109 b) a due diligence certificate as per Form A of Annexure - 1. 2.2.4. ....
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....sor(s)/ Manager. Provided that, in case of change in sponsor group, fresh filing shall be applicable only if the involved sponsor group entity(ies) hold/propose to hold more than 5% of the total units of the REIT after initial offer on a post-issue basis. Change in more than half of the board of directors of the Manager. Change in any object(s) of the issue contributing/amounting to more than 20% of the issue size. Any increase or decrease in estimated issue size by more than twenty five per cent. 2.2.9. All other changes/updations in the draft offer document or offer document which are not covered under clause 2.2.8 above shall be carried out by the lead merchant banker and offer document with updated details shall be filed with the Board without fees. 2.2.10. The manager shall, after filing the offer document with the Board, make a pre- issue advertisement on the website of the sponsor, manager and stock exchanges. 2.2.11.The manager may also issue such pre-issue advertisement in any newspaper and on the website of the REIT, if applicable. 2.3. Allocation in public issue 2.3.1. In an issue made through the book building ....
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.... or insurance companies promoted by entities which are associate of the merchant bankers or pension funds of entities which are associate of the merchant bankers or Alternate Investment Funds (AIFs) 4 Circular No. SEBI/HO/DDHS/CIR/P/2019/15 dated January 15, 2019 Page 7 of 109 sponsored by the entities which are associate of the merchant bankers or FPIs other than Category III sponsored by the entities which are associate of the merchant bankers, shall apply under the Anchor Investors category.]5 h) The parameters for selection of Anchor Investor shall be clearly identified by the merchant banker(s). 2.4. Application and Abridged version of the offer document. 2.4.1. The application form and the abridged version of the offer document as stated in Regulation 14(13) of the REIT Regulations for the issue shall be prepared by the merchant banker(s). 2.4.2.The merchant banker(s) shall make arrangements for distribution of the application form along with a copy of the abridged version of the offer document. 2.4.3. The abridged version of the offer document shall contain the disclosures as specified in Annexure - 3 and shall not contain a....
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....7.3. In case of underwritten issue, the lead merchant banker(s) shall undertake minimum underwriting obligations as specified in the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992. 2.8. Price and price band 2.8.1. The manager on behalf of the REIT may determine the price of units in consultation with the merchant banker(s) or through the book building process. 2.8.2. Differential price shall not be offered to any investor. 2.8.3. The manager on behalf of the REIT shall announce the floor price or price band at least [two] working days before the opening of the bid (in case of an initial public offer) on the website of the sponsor, manager and stock exchanges and 6 Circular No. SEBI/HO/DDHS/CIR/P/2019/15 dated January 15, 2019 7 Circular No. SEBI/HO/DDHS/CIR/P/2019/15 dated January 15, 2019 Page 9 of 109 in all the newspapers in which the pre issue advertisement was released and website of REIT, if applicable. 2.8.4. The announcement referred to in clause 2.8.3 above shall contain relevant financial ratios computed for both upper and lower end of the price band and also a statement drawing attention of t....
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....ne by respective SCSBs only). All applications shall be stamped and thereby acknowledged by the intermediary at the time of receipt. 2.9.4.Role of Stock Exchanges: a) Stock Exchanges to provide transparent electronic bidding facility. b) Stock exchange(s) shall validate the electronic bid details with depository's records for DP ID, Client ID and PAN, by the end of each bidding day and bring the inconsistencies to the notice of SCSBs or intermediaries concerned, for rectification and re-submission within the time specified by stock exchange(s). c) d) Stock exchange(s) shall allow modification of selected fields viz. DP ID/Client ID or Pan ID (Either DP ID/Client ID or Pan ID can be modified but not BOTH), Bank code and Location code in the bid details already uploaded on a daily basis upto timeline as has been specified. The stock exchanges shall develop the systems to facilitate the investors to view the status of their public issue applications on their websites and sending the details of applications and allotments through SMS and E-mail alerts to the investors. 2.9.5. The blocking of funds accompanied with any revision....
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....cess shall be maintained by the merchant banker(s). 2.11.2.The merchant banker(s) and other intermediaries associated in the book building process shall maintain records of the book building prices. 2.11.3.The Board shall have the right to inspect the records, books and documents relating to the book building process and such person shall extend full co- operation. 2.12.Post-issue reports. 2.12.1. The lead merchant banker shall submit the following post-issue reports to the Board: a) initial post issue report as specified in Part A of Annexure - 2, within three working days of closure of the issue. b) final post issue report as specified in Part B of Annexure - 2, within fifteen days of the date of finalization of basis of allotment or within fifteen days of refund of money in case of failure of issue. 2.12.2. The lead merchant banker shall submit a due diligence certificate along with the final post issue report as per Form D of Annexure - 1. 2.13. Public communications, publicity materials, advertisements and research reports. 2.13.1.Any public communication including advertisement, publicity material, research reports, ....
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....ously with the programme in a narrow strip at the bottom of the television screen) on television. in any issue advertisement on television screen, the risk factors shall not be scrolled on the television screen and the advertisement shall advise the viewers to refer to the red herring prospectus or other offer document for details. Page 14 of 109 k) it shall not contain slogans, expletives or non-factual and unsubstantiated titles. I) if it contains highlights, it shall also contain risk factors with equal importance in all respects including print size of not less than point seven size. 2.13.5. No such public communication shall be issued giving any impression that the issue has been fully subscribed or oversubscribed during the period the issue is open for subscription. 2.13.6. No such public communication shall contain any offer of incentives, whether direct or indirect, in any manner, whether in cash or kind or services or otherwise. 2.13.7.[The merchant bankers shall submit a compliance certificate in respect of news reports appearing for the period between the date of filing the draft offer document with the Board an....
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....) c) is a promoter, director or person in control of any other company or a sponsor, manager or trustee of any other REIT or REIT which is debarred from accessing the capital market under any order or directions made by the Board; is in the list of the wilful defaulters published by the Reserve Bank of India. 2.15.2.Alteration of rights of holders of units: No REIT shall alter the terms (including the terms of issue) of units which may adversely affect the interests of the holders of that units unless a resolution to that effect is passed at a meeting of the unitholders in accordance with Regulation 22(5) of REIT Regulations. 2.15.3.Prohibition on payment of incentives: No person connected with the issue, including a person connected with the distribution of the issue, shall offer any incentive, whether direct or indirect, in any manner, whether in cash or kind or services or otherwise to any person for making an application for allotment of units: Page 16 of 109 Provided that nothing contained in this regulation shall apply to fees or commission for services rendered in relation to the issue. 2.15.4.Appointment of Compliance....
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.... 3.1.2. If the closing date of the last completed financial year falls more than six months before the date of offer document, then the REIT shall also disclose interim financial information, in addition to the three year financial information referred in para 3.1.1 above. The said interim financial information shall be not more than six months old from the date of offer document. 3.2. Nature of financial information 3.2.1. REIT shall disclose the financial information for the previous three financial years and the interim period, if any, in either of the following manner depending upon the history of the REIT: a) If the REIT has been in existence for the last three completed financial years immediately preceding the date of offer document, then the historical financial statements of the REIT (on both standalone as well as consolidated basis) for last three years, and the interim period, if any, shall be disclosed. b) If the REIT has been in existence for a period lesser than the last three completed financial years and the historical financial statements of REIT are not available for some portion or the entire portion of the repor....
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....period errors/items (as discussed in Ind AS 8 'Accounting Policies, Changes in Accounting Estimates and Errors') shall be identified and adjusted in arriving at the profits of the years to which they relate. Where there has been a change in accounting policy, the profits or losses/incomes or expenditures of the earlier years (required to be disclosed in the offer document) and of the year in which the change in the accounting policy has taken place shall be recomputed to reflect what the profits or losses/incomes or expenditures of those years would have been if a uniform accounting policy was followed in each of these years. If any accounting policy followed in past was not in compliance with applicable laws and/or accounting standards, the financial statements shall be adjusted and recomputed in accordance with correct accounting policies. The Balance Sheet shall be prepared after deducting the balance outstanding on Revaluation reserve account from both Fixed assets and Reserves and the Net worth should be arrived at after such deductions. 3.3.5. Financial statements shall disclose all ‘material' items, i.e., the items if ....
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.... 3.4.5.Related party transactions: Page 21 of 109 a) For the related parties as defined in the REIT Regulations, the REIT shall provide relevant disclosures of all related party transactions in compliance with the requirements of "Ind AS 24 - Related Party Disclosures" and the REIT Regulations. b) Further, the following additional disclosures related to Related parties and Related party transactions shall also be included: Ä°. Details of related party and its relationship with REIT; ii. Nature of the transaction; iii. Value of the transaction; iv. In case of any related party transaction involving acquisition or disposal of a REIT asset, the following additional information shall be provided â– Summary of valuation report; â– Material conditions or obligations in relation to the transaction; â– Rate of interest, if external financing has been obtained for the transaction/acquisition; and â– Any fees or commissions received or to be received by any associate of the related party in relation to the transaction. 3.4.6.Capitalisation statement A REIT shall disclose a Capitalisation State....
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....es to be followed in such case, the auditor shall be guided by the procedures stated in the Standard on Auditing (SA) 600, "Using the Work of another Auditorâ€, to the extent applicable. Further, the Page 23 of 109 d) fact that the financial statements audited by other auditors have been relied upon shall be disclosed in the audit report. As a part of the audit report, the auditor shall state whether: i. ii. iii. he has obtained all information and explanations which, to the best of his knowledge and belief, were necessary for the purpose of his audit; the Balance Sheet and the Statement of Profit and loss/Income and Expenditure are in agreement with the books of account of the REIT; and the financial statements comply with the applicable accounting standards in his opinion. e) Ä°. As a part of the audit report, the auditor shall give his opinion as to whether: the balance sheet gives a true and fair view of the state of affairs of the REIT as at the balance sheet dates; ii. iii. iv. V. the statement of profit and loss/income and expenditure gives a true and fair view of the REIT's profits....
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....alia contain the following: ■Overview of the business of the REIT Page 25 of 109 " ◉ " ■◉ A summary of the financial information containing significant items of income and expenditure. Factors that may affect results of the operations, key risks and mitigating factors Quality of earnings and revenue streams Significant developments subsequent to the last financial year: • A statement by the Manager whether in their opinion there have arisen any circumstances since the date of the last financial statements as disclosed in the offer document and which materially and adversely affect or is likely to affect the business or profitability of the REIT, or the value of its assets, or its ability to pay its liabilities within the next twelve months. Procedure for dealing with and approval of related party transactions Related party transaction(s) involving acquisition or disposal of a REIT asset • The analysis shall discuss impact of such acquisition/disposal on the yield of the units of REIT An analysis of reasons for the changes in significant items of income and expend....
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....Rules, 2006 during the entire period of last three years, then the three year financial information of such entity shall be prepared in accordance with Companies (Accounting Standards) Rules, 2006. Similarly, if the concerned entity is required to follow Companies (Indian Accounting Standards) Rules, 2015 during the entire period Page 27 of 109 of last three years, then the three year financial information shall be prepared in accordance with Companies (Indian Accounting Standards) Rules, 2015. 3.16. In case the Manager and/or Sponsor(s) has/have done a transition from Companies (Accounting Standards) Rules, 2006 to Companies (Indian Accounting Standards) Rules, 2015 at any time during the period of last three years, then the financial information for the last three years shall be disclosed on the following basis: a) If the concerned entity is following or is required to follow Companies (Indian Accounting Standards) Rules, 2015 for the latest two years (for the latest three years including comparatives of the first year of adoption) out of last three completed years, then the financial information for all the three years shall be prepar....
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....ndicated framework shall be followed in so far as whatever is applicable to the Holdco/SPV/REIT. 3.20.REIT may take guidance from the following framework for defining and calculating NDCFs at the Holdco/SPV level and at the REIT level: (I.) Calculation of Net Distributable Cash Flows at the SPV level: Description Amount Profit after tax as per Statement of profit and loss/income and expenditure (standalone) (A) XX Add: Depreciation and amortisation as per Statement of profit and loss/income and expenditure XX Add/less: Loss/gain on sale of Real estate assets XX Add: Proceeds from sale of Real estate assets adjusted for the following: related debts settled or due to be settled from sale proceeds directly attributable transaction costs XX proceeds reinvested or planned to be reinvested as per para 18 (7) (a) of the REIT Regulations Page 29 of 109 Add: Proceeds from sale of Real estate assets not distributed pursuant to an earlier plan to re-invest, if such proceeds are not intended to be invested subsequently Add/less: Any other item of non-cash expense / non cash income (net of actual cash flows for these ....
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....iples for preparation of combined financial statements: 3.21.For preparation of Combined Financial Statements, as has been indicated in paragraph 3.2.1 b) under Section '(A)' above, REIT shall follow the following principles: 3.21.1.Period for which combined financial statements shall be disclosed When the REIT has not been in existence for some portion or the entire portion of the reporting period of three years and interim period, if any, then the financial information must be provided through combined financial statements, showing the combined financial performance of all the proposed REIT assets, for such period when REIT was not in existence. 3.21.2.Assets/entities forming part of Combined Financial Statements: All the assets or entities, which are proposed to be owned by the REIT, as per the disclosures in the offer document, shall collectively form part of combined financial statements. 3.21.3.Underlying assumption for preparation of Combined Financial Statements Such combined financial statements shall be prepared based on an assumption that all the assets and/or entities, proposed to be owned by REIT, were part of a sin....
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....s that are included in the Combined Financial Statements. 3.22. In addition to the principles listed at paragraph 3.21 above, the REIT/Manager, while preparing the Combined Financial Statements of the REIT, shall also be guided by the requirements laid down in the 'Guidance Note on Combined and Carve-Out Page 32 of 109 Financial Statements' and any other pertinent guidance/directions issued by ICAI in this context. (H) Minimum Disclosures for key financial statements: 3.23.For the financial statements listed at Paragraph 3.3.3 of Section '(A)' above, the line items shall, at minimum, include the following: 3.23.1.Line items for Balance Sheet: Assets a) Ä°. Property, plant and equipment; ii. Capital work-in-progress iii. Investment property; iv. Intangible assets; V. Inventories; vi. Other receivables; vii. Other financial assets (excluding Inventories & Other Receivables) viii. ix. Cash and cash equivalents; Deferred tax assets; X. Assets for current tax. b) i. ii. iii. iv. Equity and Liabilities Unit capital; Other payables; Provisions; Financial liabi....
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....e "Statement of Cash flow / Receipts and Payments" Statement of Cash flow / Receipts and Payments, shall be prepared in accordance with the requirements of Ind AS 7-"Statement of Cash Flows". 3.23.5.Line items for 'Statement of Net Assets at Fair Value' The line items for the Statement of Net Assets at Fair Value, shall, at minimum, include the following: S.No. Particulars A. Assets B. Liabilities Book Value Fair Value XXXX XXXX XXXX (as reflected in the balance sheet) C. Net Assets (A-B) XXXX XXXX D. No. of Units XXXX XXXX E. NAV (C/D) XXXX XXXX Notes: (i) 'Statement of Net Assets at Fair Value' shall be provided only as on the last date of the financial information disclosed in the offer document. Page 35 of 109 (ii) Further, the breakup of the fair values of the assets shall be given property-wise in the notes to the Statement of Net Assets at Fair Value. 3.23.6.Line items for ‘Statement of Total Return at Fair Value': The line items for the Statement of Total Return at Fair Value, shall, at minimum, include the following: Particulars Total Comprehensi....
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....inancial year. 11 Circular No. CIR/IMD/DF/146/2016 dated December 29, 2016 Page 37 of 109 The half yearly financial information shall contain comparative information for the immediately preceding half year as well as for the corresponding half year in the immediately preceding financial year. 4.3.2.The comparative information would consist of corresponding amounts (comparative figures) for all the items shown in the key financial statements (as specified in Paragraph 4.5 below), including notes, and for the additional disclosures (as specified in Paragraph 4.6 below), to the extent applicable. 4.3.3.In cases where the REIT was not in existence in the previous corresponding reporting period(s) mentioned at Paragraph 4.3.1 above, then the comparative information may not be provided and the said fact shall be clearly disclosed. 4.4. Basis of preparation of financial information 4.4.1.The financial information shall be prepared on the basis of accrual accounting policy and shall be in accordance with uniform accounting practices adopted for all the periods. 4.4.2. The financial information shall be prepared in accordance with Indian Ac....
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.... they can, individually or collectively, influence the economic decisions made on the basis of the financial statements. For determining materiality, the REIT shall be guided by Paragraph 3.5 in Section A of Annexure-A to the SEBI Circular No. CIR/IMD/DF/141/2016 dated December 26, 2016 on 'Disclosure of financial information in offer document/placement memorandum'. (paragraph 3.3.5 of Chapter 3 of the master circular) 4.5.6.In cases of any sale/divestment of any holding(s)/investment(s) in underlying SPV(s)/HoldCo(s) or any sale of any real estate asset(s) by the REIT, the profit/loss on such transactions should be shown on a gross basis. Page 39 of 109 4.6. Additional disclosures while submission of financial information In addition to the key financial statements referred in Paragraph 4.5 above, the following disclosures shall also be included as a part of both the half yearly as well as the annual financial information unless otherwise specified. Further, the below mentioned disclosures shall also be subjected to audit/limited review if applicable: 4.6.1.Statement of Net Distributable Cash Flows (NDCFs): A REIT shall disclose s....
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....ied opinion(s) or other reservation(s) in his audit report or limited review report in respect of the financial results of the immediately preceding financial year or half year, which had an impact on the profit or loss of that period, then the REIT shall disclose the following: Brief details of the past modified opinion modified opinion(s) or other reservation(s) • Whether such modified opinion(s) or other reservation(s) have been resolved o If yes, details thereof 4.6.5.Other Statements: olf no, the reasons thereof and the steps which the REIT intends to take in the matter a) The REIT shall also disclose the following statements: b) • Statement of Earnings per Unit: • Statement of Contingent liabilities: • Statement of Commitments: Statement of Related party transactions The details and the basis of disclosures for the above statements shall be same as specified in Paragraph 4 in Section A of Annexure-A to the SEBI Circular No. CIR/IMD/DF/141/2016 dated December 26, 2016 on 'Disclosure Page 41 of 109 of financial information in offer document for REITS (Paragraph 3.4 of Chapte....
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.... e) of Chapter 3 of the master circular), the auditor shall also give his opinion on the following: a) whether the statement of NDCFs gives a true and fair view of NDCFs for the years/periods ended at the balance sheet dates 4.8.4. The financial information submitted to the Stock Exchanges shall be accompanied with Audit Report or Limited Review Report, as the case may be. (B) Financial information of Manager 4.9. Along with the annual financial information of REIT, a REIT shall disclose summary of the audited consolidated financial statements (including the Balance Sheet and Statement of Profit and Loss (without schedules)) of Manager for the latest financial year, along with comparative figures for the immediate preceding financial year, prepared in accordance with the accounting standards and laws, as applicable for the Manager. 4.10. The above information may not be disclosed if the Manager's Net worth is not materially eroded (Material erosion shall be judged by the Trustees in light of various pertinent factors including but not restricted to size of REIT, size of Manager, amount of Net worth erosion, prevailing circumstance....
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.... Page 44 of 109 As a % of mandatorily Cat Total held 12 No. of units Number of units pledged or otherwise No. of e Category of Outsta encumbered 12 Units gor Unit holder nding No. of As a % No. As a % Held y Units units of total of of total units units units held held Sponsor Group (1) Indian (a) Individuals/ HUF (b) Central/State Govt. (c) Financial Institutions/B anks (d) Any Other (specify) Sub-Total (A) (1) (2) Foreign (a) Individuals (Non Resident Indians / Foreign Individuals) (b) Foreign government (c) Institutions (d) Foreign Portfolio Investors (e) Any Other (specify) Sub- Total (A) (2) Total unit holding of Sponsor & Page 45 of 109 As a % of mandatorily Cat Total held 12 No. of units Number of units pledged or otherwise No. of e Category of Outsta encumbered 12 Units gor Unit holder nding No. of As a % No. As a % Held y Units units of total of of total units units uni....
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....grievance redressal and other relevant details; Information, report, notices, call letters, circulars, proceedings, etc. concerning units; All information and reports including compliance reports filed by REIT with respect to units; and All intimations and announcements made by REIT to the stock exchanges Any other information which may be relevant for the investors 4.15.2.Further, the contents of the website should be updated within 2 days of any changes / developments which trigger a need for an update on the website. 4.16.Grievance Redressal Mechanism: 4.16.1.REIT shall ensure that adequate steps are taken for expeditious redressal of investor complaints. 4.16.2.REIT shall ensure that it is registered on the SCORES platform or such other electronic platform or system of the Board as shall be mandated from time to time, in order to handle investor complaints electronically in the manner specified by the Board. 4.16.3.[All complaints including SCORES complaints received by the REIT shall be disclosed in the format mentioned in Annexure - 4 on the website of the REIT and Page 48 of 109 also filed with the recognized stock exc....
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....ies 14 4.18.1.REITs which have issued debt securities shall be required to comply with a) following continuous disclosure requirements: Regulations 50, 51, 54, 55, 56, 57, 58, 59 and 60 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("LODR Regulations") and any other provisions of the aforesaid regulations as may be applicable to REITs. b) Additional line items that shall be disclosed by REITs which have issued/listed their debt securities are as follows: Ä°. Asset cover available; ii. debt-equity ratio; iii. debt service coverage ratio; iv. interest service coverage ratio; d) V. net worth; Modified opinion(s) in audit reports having a bearing on the interest payment or redemption or principal repayment capacity of the REITs shall be appropriately and adequately addressed by the board of the manager while publishing the accounts for the said period. REITs shall submit to the stock exchange on a half yearly basis along with the half yearly financial results, a statement indicating material deviations, if any, in the use of proceeds of issue of d....
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....vestor shall take allotment at the price at which allocation was agreed to be made to it in unit subscription agreement. The draft offer document or offer document, as applicable, shall disclose details of the unit subscription agreement. Such details shall include name of each strategic investor, the number of units proposed to be subscribed by it or the investment amount, proposed subscription price per unit, etc. The unit subscription agreement shall not be terminated except in the event the issue fails to collect minimum subscription. 15 Circular No. SEBI/HO/DDHS/CIR/P/2018/10 dated January 18, 2018 Page 52 of 109 5.1.2.The units subscribed by strategic investors, pursuant to the unit subscription agreement, will be locked-in for a period of 180 days from the date of listing in the public issue. Page 53 of 109 Chapter 6.Guidelines for issuance of debt securities by REITs 16 6.1. For issuance of debt securities, REITs shall follow provisions of SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (“ILDS Regulations") in the following manner: 6.1.1.Regulation 4 (5) and Regulation 16 (1) of ILDS Regulations, 2008....
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....t of units under these guidelines, if it satisfies the following conditions: 7.2.1. A resolution of the existing unitholders approving the issue of units, in accordance with Regulation 22(6) of the REIT Regulations has been passed. 7.2.2. Units of the same class, which are proposed to be allotted have been listed on a stock exchange for a period of at least six months prior to the date of issuance of notice to its unit holders for convening the meeting to pass the resolution in terms of clause 7.2.1 above: Provided in case of issuance of units through “institutional placement" the minimum listing period required shall be 12 months. 7.2.3. The REIT has obtained in principle approval of the stock exchange(s) for listing of the units proposed to be issued under these guidelines. 7.2.4. The REIT is in compliance with all the conditions for continuous listing and disclosure obligations under the REIT Regulations and circulars issued thereunder. 7.2.5. None of the respective promoters or partners or directors of the sponsor(s) or manager or trustee of the REIT is a fugitive economic offender declared under section 12 of the Fugitiv....
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....fifteen percent per annum. 7.3.6.The REIT shall file an allotment report with SEBI within seven days of allotment of the units providing details of the allottees and allotment made. Placement document, if applicable, shall also be filed with the Board along with the allotment report. 7.3.7.The issue of units shall comply with the conditions and manner of allotment for preferential issue and institutional placement as provided in paragraphs 7.4 to 7.11 below. Manner of preferential issue of units by a listed REIT 7.4. Unit holders' approval 7.4.1.The issuer shall, in an explanatory statement to the notice for the general meeting proposed for passing the resolution in terms of para 7.2.1 above, make appropriate disclosures including the following: a) Objects of the preferential issue; Maximum number of units to be issued; b) NAV of the REIT; c) d) e) f) g) Intent of the parties to the REIT, their directors or key managerial personnel to subscribe to the issue; Unitholding pattern of the REIT before and after the preferential issue; Time frame within which the preferential issue shall be completed; Identity ....
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....llow the same pricing method.] 19 7.5.2.A preferential issue of units to “institutional investors†not exceeding five in number, shall be made at a price not less than the average of the weekly high and low of the volume weighted average prices of the related units quoted on a recognised stock exchange during the two weeks preceding the relevant date. c) Explanation: a) "Relevant date" for the purpose of clauses related to preferential issue of units shall be the date thirty days prior to the date on which the meeting of unitholders is held to consider the preferential issue. Where the relevant date falls on a weekend or a holiday, the day preceding the weekend or the holiday will be reckoned to be the relevant date. b) “Relevant stock exchange†shall mean the recognised stock exchange in which the units of the REIT are listed, and in which the highest trading volume in respect of the units of the REIT has been recorded during the preceding twenty-six weeks prior to the relevant date. "Frequently traded units" for the purpose of this chapter shall mean the units of the REIT, in which the traded turnover o....
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....d any units of the issuer during the six months preceding the relevant date. 20 Circular No. SEBI/HO/DDHS/DDHS/CIR/P/2020/35 dated March 13, 2020 21 Circular No. SEBI/HO/DDHS/DDHS/CIR/P/2020/184 dated September 28, 2020 Page 61 of 109 Explanation: Where any person belonging to sponsor(s) or the sponsor group has sold/transferred their units of the issuer during the six months preceding the relevant date, the sponsor(s) and sponsor group shall be ineligible for allotment of units on preferential basis. 7.7.2.Allotment pursuant to the unit holders' resolution shall be completed within a period of fifteen days from the date of passing of such resolution: Provided that in case the approval of any regulatory, governmental or statutory body/agency is required, then in such cases the period of fifteen days will commence from the date of approval from such regulatory, governmental or statutory body/agency: Provided further that where the REIT fails to allot the units within the specified time, the monies received shall be refunded through verifiable means within twenty days from the date of the resolution, and if any such money is not repa....
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.... five percent on the price so calculated, subject to approval of unitholders through a resolution as specified in para 7.2.1. Explanation: "relevant date" for the purpose of clauses related to institutional placement shall be the date of the meeting in which the board of directors of the manager decides to open the issue. B. Pricing of infrequently traded units Page 63 of 109 7.9.2.Where the units of the REIT are not frequently traded, the price determined by the REIT shall take into account the NAV of the REIT based on a full valuation of all existing REIT assets conducted in terms of REIT Regulations. 7.10.Transferability 7.10.1.The units allotted through the institutional placement shall not be sold by the allottee for a period of one year from the date of allotment, except on a recognised stock exchange. 7.11.Allotment 7.11.1.Allotment pursuant to the unit holders' resolution shall be completed within a period of 365 days from the date of passing of such resolution: Provided that where the REIT fails to allot the units within the specified time, the monies received shall be refunded through verifiable means within twenty ....
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....S/DDHS/CIR/P/2020/09 dated January 17, 2020 Page 65 of 109 8.2.1. The manager on behalf of the REIT, in line with Regulation 10(5) of REIT Regulations, shall appoint one or more merchant bankers, at least one of whom shall be a lead merchant banker and shall also appoint other intermediaries, in consultation with the merchant banker(s), to carry out the obligations relating to the issue. 8.2.2. If the REIT desires to have the issue underwritten, it shall appoint underwriters in accordance with the Securities and Exchange Board of India (Underwriters) Regulations, 1993. 8.2.3. In case of an underwritten issue, the merchant banker(s) shall undertake minimum underwriting obligations as specified in the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992. 8.2.4. The merchant banker(s) shall exercise due diligence and shall satisfy themselves with all aspects of the issue including the veracity and adequacy of disclosures in the letter of offer. 8.3. Draft Letter of Offer and Letter of Offer 8.3.1. The manager, on behalf of the REIT shall file a draft letter of offer with the Board through the lead merchant ba....
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....e Board and highlighting all changes made in the draft letter of offer before filing the letter of offer with the stock exchanges. 8.3.9. The lead merchant banker shall, along with filing of the letter of offer with the Board and the stock exchange(s), furnish to the Board, a due diligence certificate along the lines of Form B of Annexure I of SEBI Circular Page 67 of 109 CIR/IMD/DF/136/2016 dated December 19, 2016 (Annexure - 1 of the master circular). 8.3.10. The draft letter of offer and letter of offer shall contain disclosures as specified in Annexure - 6. 8.3.11.The manager, on behalf of the REIT, and the merchant banker(s) shall ensure that the letters of offer are hosted on the websites of the REIT, merchant bankers and the stock exchanges where the units are listed and their content is the same as the versions filed with the Board and the stock exchange(s), as applicable. 8.3.12. The draft letter of offer and letter of offer, as applicable, shall also be furnished to the Board in soft copy. 8.4. Application 8.4.1. The application form for the issue shall be prepared by the merchant banker(s) and the merchant banker(s....
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....imum subscription as specified under (a) above is not received, the application monies shall be refunded to the applicants forthwith, but not later than 15 days from the issue closing date. Page 69 of 109 8.8.2. The sponsor(s), their associates and members of the sponsor group who are unitholders as on the record date, may choose to subscribe to additional units subject to disclosure of such intent in the draft letter of offer and letter of offer. Provided that such additional subscription over and above the entitlement shall be subject to compliance with the minimum public unitholding requirements. 8.8.3. The minimum allotment and trading lot for units issued shall be equivalent to the minimum allotment and trading lot as applicable to the units of the same class, under the extant provisions of the REIT Regulations or circulars issued thereunder. 8.8.4. The REIT shall not make any allotment in excess of the units offered through the letter of offer except in case of oversubscription for the purpose of rounding off to even lots to make allotment, in consultation with the designated stock exchange. Provided that in case of ove....
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....alified institutions placement, institutional placement, issue of bonus shares or otherwise during the period between the date of filing the draft letter of offer with the Board and the listing of the units offered through the letter of offer or refund of application monies. 8.10.The REIT shall file an allotment report with the Board providing details of the allottees and allotment made within 15 days of the issue closing date. Fast Track Rights Issue 8.11.[A REIT satisfying the conditions mentioned below and desirous of issuing units under fast track rights issue shall, for such an issue, follow guidelines specified in Page 71 of 109 this master circular except those under paragraphs 8.3.1, 8.3.2, 8.3.7, and 8.3.8 above: 8.11.1. 8.11.2. 8.11.3. 8.11.4. 8.11.5. 8.11.6. 8.11.7. 8.11.8. 8.11.9. the units of the REIT have been listed on any stock exchange for a period of at least three years immediately preceding the record date; all the units of the REIT are held in demat form on the record date; the average market capitalisation of public unitholding of the REIT is at least two hundred and fifty crore rupe....
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....ragraph 8.3.9 and shall pay fees to the Board as specified in Schedule II of REIT Regulations for issuing units through fast track rights issue route.]23 23 Circular No. SEBI/HO/DDHS/DDHS/CIR/P/2020/35 dated March 13, 2020 Page 73 of 109 Chapter 9.Encumbrance on units of REITs24 9.1. Encumbrance on units 9.1.1.Entities required to hold units in terms of Regulation 11(3) of the REIT Regulations may create encumbrance on such units during the mandatory holding period wherein encumbrance shall include pledge, lien, negative lien, non-disposal undertaking etc. or any other covenant, transaction, condition or arrangement in the nature of encumbrance: Provided that the conditions for creation and invocation of encumbrance, provided in this chapter, are also included in the agreement executed for the purpose of creation of such encumbrance: 9.2. Conditions for invocation during the mandatory holding period 9.2.1.Such encumbrance shall not be permitted to be invoked during the holding period prescribed in terms of Regulation 11(3) of the REIT Regulations unless the following conditions are satisfied: a) b) the person(s) invokin....
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.... understanding, formal or informal, directly or indirectly co-operate for acquisition of units of the REIT. Without prejudice to the generality of the foregoing, the persons falling within the following categories shall be deemed to be persons acting in concert with other persons within the same category, unless the contrary is established, · İ. - a company, its holding company, subsidiary company and any company under the same management or control; ii. a company, its directors, and any person entrusted with the management of the company; iii. directors of companies referred to in item i) and ii) of this sub- clause and associates of such directors; iv. immediate relatives; 25 Circular No. SEBI/HO/DDHS/DDHS/CIR/P/2020/123 dated July 17, 2020 Page 76 of 109 V. vi. vii. viii. ix. X. an institutional investor and wherever applicable its sponsor, trustees, trustee company, asset management company; a collective investment scheme and its collective investment management company, trustees and trustee company; a merchant banker and its client, who is an Acquirer; a portfolio manager and ....
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....nsor under regulation 22(8) of REIT Regulations is triggered pursuant to an open offer under the provisions of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011, the relevant date shall mean the date of public announcement made for the acquisition in terms of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011.] 26 10.2.An acquirer providing exit option to dissenting unitholders in terms of this chapter shall appoint one or more merchant bankers, registered with the Board, as lead manager(s) for the exit option/offer, who shall ensure compliance with the provisions of REIT Regulations and this chapter. Lead manager(s) shall send the Letter of Offer (LoF) to all dissenting unit holders and shall also file the same along with the due diligence certificate, in line with format specified in Form A in Annexure-l of SEBI circular no. CIR/IMD/DF/136/2016 dated December 19, 2016 (Annexure - 1 of the master circular), with the Exchange(s). The broad contents of LoF are indicated in Annexure - 8. 26 Circular No. SEBI/HO/DDHS/DDHS_Div3/P/CIR/2021/640 dated October 05, 2021 Page 78 of 109 10.3. Upon compl....
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.... and total number of units held by them as of the cut-off date, as certified by its compliance officer. The day of aforesaid intimation by Manager shall be construed as "Date of Intimation". Acquirer through the Lead Manager shall give a public notice to stock exchange(s) and Manager regarding his intention of providing exit option to dissenting unit holders Upon receipt of public notice from the Lead Manager, Manager shall provide the list of dissenting unit holders to the Lead Manager(s). and within twenty one days from the date of receipt of notice from the acquirer Within forty eight hours of the last day of voting Within twenty four hours of the Date of Intimation Immediately but not later than twenty four hours from the receipt of public notice from the Acquirer Page 80 of 109 Activity Description Acquirer through the Lead Manager(s) shall send the Letter of Offer (LoF) to all dissenting unit holders and file a copy of the same with the stock exchange(s). Lead Manager(s) shall exercise due diligence with regard to all information and disclosures contained in the LoF. The stock e....
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....ger that it shall give exit option to Timelines Along with Public Announcement made for the acquisition in terms of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 Immediately but not later than twenty four hours from the receipt of such notice Not later than two working days from the completion of the acquisition which triggered the provisions of Regulation 22(6A) or Regulation 22(8) of REIT Regulations Page 82 of 109 Activity Description dissenting unit holders in case approval of the requisite majority is not received. Further, a person being inducted as a sponsor shall give declaration to Manager with regard to satisfying the eligibility conditions prescribed for a sponsor under REIT Regulations. Timelines Immediately but not later On receipt of second notice, Manager shall than twenty four hours from intimate to stock exchange(s) the receipt of such second notice Voting to be completed not Manager shall convene a meeting of unit holders for voting later than three working days from the cut-off date Intimation of outcome of the unit hol....
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....10.4.7.The escrow account referred to in aforesaid table may be in the form of - a) cash deposited with any scheduled commercial bank; and/or - b) bank guarantee issued in favour of the Lead Manager to the exit option/offer by any scheduled commercial bank; i. ii. iii. In the event of the escrow account being created by way of a bank guarantee, the Acquirer shall also ensure that at least one per cent of the total consideration payable is deposited in cash with a scheduled commercial bank as a part of the escrow account. For such part of the escrow account as is in the form of a cash deposit with a scheduled commercial bank, the acquirer shall while opening the account, empower the lead manager to the exit option/offer to instruct the bank to issue a banker's cheque or demand draft or to make payment of the amounts lying to the credit of the escrow account. For such part of the escrow account as is in the form of a bank guarantee, such bank guarantee shall be in favour of the lead manager to the exit option/offer and shall be kept valid throughout the period of exit option/offer and for an additional period of thirty ....
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....d of twenty-six weeks after the tendering period at a price higher than the exit option price, the Acquirer and persons acting in concert shall pay the difference between the highest acquisition price and the exit option price, to all the unit holders whose units were accepted in the exit option/offer, within sixty days from the date of such acquisition: Provided that this provision shall not be applicable to acquisitions under another exit option/offer under REIT Regulations or open market purchases made in the ordinary course on the stock exchanges, not being negotiated acquisition of units of the REIT whether by way of bulk deals, block deals or in any other form. 10.5.4.[In case an acquisition described under Regulation 22(6A) or change in sponsor or inducted sponsor or change in control of sponsor or inducted sponsor under regulation 22(8) of REIT Regulations is triggered pursuant to an open offer under the provisions of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011, the exit option price shall stand enhanced by an amount equal to a sum determined at the rate of ten per cent per annum for the period betw....
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....cable legal requirements. (3) We confirm that besides ourselves, all the intermediaries named in the draft offer document are registered with the Board and that till date such registration is valid. 29 Circular No. CIR/IMD/DF/136/2016 dated December 19, 2016 Page 89 of 109 (4) We have satisfied ourselves about the capability of the underwriters to fulfill their underwriting commitments, if any. (5) We certify that written consent from sponsors and/or sponsor group has been obtained for inclusion of their units as part of sponsors and/or sponsor group contribution and for holding of the units for the specified period. (6) We certify that the proposed activities of the REIT for which the funds are being raised in the present issue fall within the objectives of the Trust as specified in the Trust Deed of the REIT. (7) We confirm that necessary arrangements have been made to ensure that the moneys received pursuant to the issue are kept in a separate bank account and that such moneys shall be released by the said bank only after permission is obtained from all the stock exchanges mentioned in the offer document. We further confirm that....
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.... Merchant Banker(s) to the Issue with Official Seal(s) Page 91 of 109 FORM C FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY MERCHANT BANKER IMMEDIATELY BEFORE OPENING OF THE ISSUE To, Securities and Exchange Board of India Dear Sirs, Sub.: Public Issue of by (Name of the REIT) (1) This is to certify that all the material disclosures in respect of the REIT as on the date of opening of the issue have been made through the offer document filed with the Board and designated stock exchange and subsequent amendments/ advertisements (if applicable) dated (Details of advertisements to be enclosed), We confirm: (a) that the registrations of all the intermediaries named in the offer document, are valid as on date and that none of these intermediaries have been debarred from functioning by any regulatory authority as on date. (b) that the abridged version of the offer document contains all the disclosures as specified in the REIT Regulations and circulars thereunder. Place: Date: Merchant Banker(s) to the Issue with Official Seal(s) Page 92 of 109 FORM D FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN....
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....T ISSUE REPORT FOR PUBLIC ISSUE Subscription Status: (Subscribed / Undersubscribed) (1) It is the responsibility of merchant banker(s) to give correct information after verifying the facts from the manager and the registrar to the issue. (2) The merchant banker(s) shall enclose a certificate from the refund banker that the amount of refund due to investors is deposited in a separate account giving details of the total amount deposited in the account and date of deposit. (1) IN CASE OF SUBSCRIBED ISSUE: (1) Name of the REIT: (2) Issue opening date: (3) Actual closing date (4) Issue Details (as per the offer document): (a) Offer price per unit (b) Issue Size : (5) 3-Day Report : Rs. in lakhs (a) Due on: (b) Submitted on: (6) No. of collecting banks: (Also specify no. of bank branches) (7) Bank-wise names of branches which did not submit final consolidated certificates from closure of issue and mention the dates when they actually submitted (8) Subscription Details - (i) No. of applications recd. (ii) No. of units applied for (iii) Amount of subscription received : Rs. (iv) No. of times ....
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....ER DOCUMENT 1. Summary of the terms of the issue Name of the REIT Name of the sponsor(s), Manager, Trustee Contact details of the Manager Contact details of the Merchant Banker(s) Listing (including name of stock Exchange(s) where it will be listed and timeline for listing) Issue Size Option to retain oversubscription ( Amount) Issue Price Face Value Minimum Application and in multiples of _ units thereafter Issue Timing 1. Issue Opening Date 2. Issue Closing Date 3. Pay-in Date 4. Expected Date of Allotment Issuance mode of the Instrument Depository Objects of the Issue Brief description of the assets under the REIT Relevant Financial ratios Capital structure of the REIT assets Brief details of valuation of each asset Brief description of ROFR, if any Brief details of policy of distributions to the unit holders Brief details of fee and expenses charged or chargeable to the REIT 2. Top 5 risk factors 31 Circular No. CIR/IMD/DF/136/2016 dated December 19, 2016 Page 97 of 109 For Financial Year (FY) Annexure - 4.32 [see Chapter 4] Number of investor complaints pending at the be....
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....all be shown separately for periods marked by a change in capital structure, with such period commencing from the date the concerned stock exchange recognizes the change in the capital structure 2.3. The market price immediately after the date on which the resolution of the board of directors of the manager of the issuer approving the institutional placement was passed. 2.4. Valuation report which forms the basis for calculation of issue price for infrequently traded units. (if applicable) 3. The preliminary placement document and placement document shall contain the disclosures as specified under schedule III of the REIT Regulations in the following manner: a) b) The disclosures as per clauses 1, 2, 3, 5, 6, 7(a), 8, 12, 13, 14, 15, 16 and 18 shall be made in the preliminary placement document and placement document. The disclosures in clause (a) above may be incorporated by reference to disclosures made in any previous offer document or placement 33 Circular No. SEBI/HO/DDHS/DDHS/CIR/P/2019/142 dated November 27, 2019 Page 100 of 109 memorandum or placement document or annual report duly published by the REIT: P....
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.... certified by statutory auditors for the last completed financial year and the stub period (if any). Summary of the audited standalone financial statements of the assets proposed to be acquired for the previous three years and the stub period (if any) Disclosure as per clause (a) above may be incorporated by reference to any public disclosures of financials made under the REIT Regulations or any circular issued thereunder, along with link(s) to such disclosure(s) wherever available, including on the website of the REIT, stock exchanges.]34 8. Distribution including the manner of calculation of the net distributable cash flows, history of distributions made in the last three financial years or from the date of listing of the REIT and the policy, if any. 9. Other disclosures: a) Unit holding pattern b) Review of Credit Rating Grievance redressal mechanism The disclosures in clause (a), (b) and (c) above may be incorporated by reference to any public disclosures made under the REIT Regulations or any circular issued thereunder, along with link(s) to such disclosure(s) wherever available, including on the website of the ....
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....ipation by the sponsor(s), their associates and members of the sponsor group, in the issue with respect to: a) their rights entitlement b) the unsubscribed portion over and above their rights entitlement: Provided that such participation shall not result in a breach of the minimum public unitholding requirement. 36 Circular No. SEBI/HO/DDHS/DDHS/CIR/P/2020/09 dated January 17, 2020 Page 103 of 109 5. Related Party Transactions: a) Disclosure as per clause 9 of the Schedule III of the REIT Regulations, which may be incorporated by reference to disclosures made in any previous offer document or placement memorandum or placement document. b) Any disclosures made regarding related party transactions shall also be incorporated by reference to such disclosures. c) Link(s) to document(s) at (a) and (b) above wherever available, including on the website of the REIT, stock exchanges, shall be provided. 6. Valuation (latest available): a) Summary of valuation of the assets proposed to be financed through proceeds of the issue b) Valuation methodology. c) Frequency of valuation and declaration of NAV. d) Any disclosures made regar....
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....uding on the website of the REIT, stock exchanges. e) The draft letter of offer and letter of offer shall contain the process of credit of rights entitlements in the demat accounts and the renunciation thereof. f) Any material development after the date of the latest balance sheet and its impact on the performance and prospects of the REIT. 11. Such other information as is material and appropriate to enable the investors to make an informed decision. 12. Declarations (to be signed by the board of directors of the manager and sponsor) 13. The lead merchant banker shall ensure that the information contained in the draft letter of offer and letter of offer and the particulars as per audited financial statements in the letter of offer are not more than six months old from the issue opening date. Provided that REITs which are in compliance with REIT Regulations and guidelines issued thereunder may file unaudited financials with limited review for the stub period in the current financial year, subject to making necessary disclosures in this regard including risk factors. Page 105 of 109 Name of REIT Annexure - 7.38 [see Chapter 9] ....
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.... approvals and detailed timelines with regard to exit option process including operational terms and conditions etc. subject to which Acquirer(s) would accept the offer. 1.4.3.Details of exit price including total amount of funds required to make the payment of consideration to unit holders, details of escrow account and bank guarantee, as the case may be. It shall also be disclosed that the lead manager has been empowered by Acquirer to realise the value of such escrow account. 1.4.4.Procedure for accepting the offer including disclosure of relevant provisions pertaining to acceptance of units. 1.4.5.In case there is any agreement, mention important features of the agreement(s), acquisition price per unit, number and percentage of units to be acquired under the agreement, name of the seller(s), names of parties to 39 Circular No. SEBI/HO/DDHS/DDHS/CIR/P/2020/123 dated July 17, 2020 Page 107 of 109 the agreement, date of agreement, manner of payment of consideration including salient features of the agreement, if any, entered between the Acquirer and PAC with regard to the offer/ acquisition of units. 1.4.6.Due diligence certifi....