SEBI Reduces Trading Lot for InvITs to Boost Liquidity

The market regulator, the Securities and Exchange Board of India (SEBI) has significantly reduced the trading lot size for privately placed infrastructure investment trusts (InvITs) to ₹25 lakh. This move aims to encourage wider investor participation and enhance liquidity in the InvIT market.

Previously, the trading lot for secondary market trading of privately placed InvITs was ₹1 crore, and it was ₹2 crore for InvITs with at least 80% of their assets invested in completed and revenue-generating projects.

SEBI’s notification, effective from September 26, 2024, states that the trading lot for InvIT units on designated stock exchanges will now be ₹25 lakh. This reduction is expected to increase market accessibility for a broader range of investors and diversify investment portfolios.

In addition to reducing the trading lot, SEBI has also amended its regulations for InvITs and real estate investment trusts (REITs) to streamline compliance requirements and improve operational efficiency.

Key Changes Include:

• Distribution timeline: InvITs and REITs must now distribute funds to unitholders within five working days of declaring a distribution.
• Unitholder meetings: REITs and InvITs can call unitholder meetings with shorter notice periods if they obtain written or electronic consent from a specified percentage of unitholders.
• Remote participation: Unitholders can now attend meetings and cast votes remotely via video conferencing or electronic means.
• Electronic record-keeping: InvITs and REITs must maintain adequate backup systems, data storage, and business continuity plans for electronic records.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.