The Securities and Exchange Board of India (Sebi) on May 9, 2024, proposed to cut the timeline for distributing dividends in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) to five days. In a consultation paper, Sebi proposed reducing the dividend distribution deadline to five working days from the date of declaration, down from the previous deadline of the 15-day timeline. This move is expected to streamline the distribution process, and aid in making funds reach investors within a relatively shorter time frame. Sebi noted that five working days is not much of a disruption because advancements in immediate payment systems like RTGS, NEFT, IMPS, and UPI, can make the distribution process fast and efficient, even to make same-day transfers.
Sebi noted that currently majority of REITs and InvITs distribute dividends quarterly to the unitholders, which is not the case with listed companies. Sebi has sought public comments on this and the following proposals until May 30, 2024.
Reduction of a Trading lot for privately placed InvITs
Sebi has proposed the reduction of trading lot for privately placed InvITs to Rs 25 lakh, down from the earlier ticket size of Rs 1 crore, to encourage investor participation and increase liquidity for investment vehicles. Further, if the InvIT were investing at least 80 per cent of its asset value in completed and revenue-generating assets, then the erstwhile trading lot was Rs 2 crore, which also has been reduced.
Increased flexibility For Managers
The consultation paper also seeks comment on providing flexibility for managers or investment managers of REITs or InvITs to fix record dates, with them doing prior intimation to stock exchanges at least two working days in advance.
Unit-holders' meetings Within 21 days' notice
"Instead of prior review of the statement of investor complaints by the board of directors of the investment manager, such a statement shall be placed quarterly before the board of directors, Sebi suggested. It has been proposed to add a provision allowing REITs and InvITs to call unit-holders' meeting with less than 21 days' notice.
To boost investor participation, the Manager of REIT or Investment Manager of InvIT should provide video conferencing for all meetings and remote e-voting for all unit-holder meetings.
Electronic Back-Up Systems
REIT managers, investment managers of InvIT, and trustees should have sufficient electronic backup systems in place for maintaining their records. They should also have adequate system capacity for handling data transfer and alternative means of communication in case of an internet link failure. Additionally, they should have a Business Continuity Plan (BCP) and Disaster Recovery (DR) plan to maintain the integrity of data and transactions.
