Section 14 in Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014
14. Issue and allotment of units.
(1)A REIT shall make an initial offer of its units by way of public issue only.(2)No initial offer of units by the REIT shall be made unless,-(a)the REIT is registered with the Board under these regulations;(b)the value of [the REIT assets] [Substituted 'all the assets owned by REIT' by Notification No. SEBI/LAD-NRO/GN/2018/06, dated 10.4.2018 (w.e.f. 29.9.2014).] is not less than five hundred crore rupees;(ba)[ the minimum number of unit holders other than sponsor(s), its related parties and its associates forming part of public shall be not less than two hundred;] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).]Explanation. - Such value shall mean the value of the specific portion of the holding of REIT in the underlying assets or [holdco and/or] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] SPVs;(c)[ ***] [Omitted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).](d)the offer size is not less than two hundred and fifty crore rupees:Provided that the requirement of ownership of assets under clause (b) and size of REIT under clause (d) may be complied [at any point of time before allotment of units in accordance with offer document/placement memorandum] [Substituted 'with after initial offer' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] subject to a binding agreement with the relevant party(ies) that [such] [Substituted 'the' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] requirements shall be fulfilled prior to [such] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] allotment of units, [and] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] a declaration to the Board and [to] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] the designated stock exchanges to that effect and adequate disclosures in this regard in the [***] [Omitted 'initial' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] offer document.(2A)[ For an REIT raising funds through an initial offer, the units proposed to be offered to the public through such initial offer(a)shall be not less than twenty five per cent. of the total of the outstanding units of the REIT and the units being offered by way of the offer document, if the post issue capital of the REIT calculated at offer price is less than rupees one thousand six hundred crore:Provided that the requirement at sub-clause (a) shall be complied along with the requirement under Regulation 14 (2)(d) of the REIT Regulations.(b)shall be of the value of at least Rs 400 crore, if the post issue capital of the REIT calculated at offer price is equal to or more than rupees one thousand six hundred crore and less than rupees four thousand crore;(c)shall be not less than ten per cent. of the total of the outstanding units of the REIT and the units being offered by way of the offer document, if the post issue capital of the REIT calculated at offer price is equal to or more than rupees four thousand crore:Provided that any units offered to sponsor or the manager or their related parties or their associates shall not be counted towards units offered to the public:Provided further that any listed REIT which has public holding below twenty five per cent on account of sub-clauses (ii) and (iii) above, such REIT shall increase its public holding to at least twenty five per cent, within a period of three years from the date of listing pursuant to initial offer.] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).](3)Any subsequent issue of units by the REIT may be by way of follow-on offer, preferential allotment, qualified institutional placement, rights issue, bonus issue, offer for sale or any other mechanism and in the manner as may be specified by the Board.(4)REIT, through the [merchant banker] [Substituted 'manager' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).], shall file a draft offer document [along with the fee as specified in Schedule II,] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] with the designated stock exchange(s) and the Board, not less than [thirty] [Substituted 'twenty one' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] working days before filing the [***] [Omitted 'final' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] offer document with the designated stock exchange [and the Board.] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).](5)The draft offer document filed with the Board shall be made public, for comments, if any, [***] [Omitted 'to be submitted to the Board, within a period of at least ten days,' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] by hosting it on the websites of the Board, designated stock exchanges and merchant bankers associated with the issue [for a period of not less than twenty one days.] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).](6)The [draft offer document and/or offer document] [Substituted 'draft and final offer document' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] shall be accompanied by a due diligence certificate signed by the [***] [Omitted 'Manager and' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] lead merchant banker.(7)The Board may communicate its comments to the lead merchant banker and, in the interest of investors, may require the lead merchant banker to carry out such modifications in the draft offer document as it deems fit.(8)The lead merchant banker shall ensure that all comments received from the Board on the draft offer document are suitably taken into account prior to the filing of the offer document with the designated stock exchanges.(9)In case no [observations] [Substituted 'modifications' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] are [issued] [Substituted 'suggested' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] by the Board [on] [Substituted 'in' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] the draft offer document within twenty one working days from the date of receipt of satisfactory reply from the lead merchant bankers or manager, the REIT may [file] [Substituted 'issue' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] the [***] [Omitted 'final' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] offer document or follow-on offer document [with the Board and the exchange(S)] [Substituted 'to the public' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).]:[***] [Omitted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).](10)The [*] [Omitted 'final' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] offer document shall be filed with the designated stock exchanges and the Board not less than five working days before opening of the offer [*] [Omitted 'and such filing with the Board shall be accompanied by filing fees as specified under Schedule II' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).].(11)The initial offer or follow-on offer [or rights issue] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] shall be made by the REIT within a period of not more than [one year] [Substituted 'six months' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] from the date of [*] [Omitted 'last' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] issuance of observations by the Board, [*] [Omitted 'if any or if no observations have been issued by the Board, within a period of not more than six months from the date of filing of offer document with the designated stock exchanges' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).]:Provided that if the initial offer or follow-on offer [or rights issue] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] is not made within the specified time period, a fresh [draft] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] offer document shall be filed.[Provided further that the REIT shall not be required to file draft offer document with the Board in case of a fast track rights issue, subject to the fulfillment of the conditions as specified by the Board from time to time.] [Inserted by Notification No. SEBI/LAD-NRO/GN/2020/06, dated 2.3.2020 (w.e.f. 26.9.2014).](12)The REIT may invite for subscriptions and allot units to any person, whether resident or foreign:Provided that in case of foreign investors, such investment shall be subject to guidelines as may be specified by Reserve Bank of India and the government from time to time.(13)The application for subscription shall be accompanied by a statement containing the abridged version of the offer document, detailing the risk factors and summary of the terms of issue.(14)[ The minimum subscription from any investor in initial and/or public offer shall be rupees fifty thousand.] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/09, dated 22.4.2019 (w.e.f. 26.9.2014).](15)Initial offer and follow-on offer shall not be open for subscription for a period of more than thirty days.(16)In case of over-subscriptions, the REIT shall allot units to the applicants on a proportionate basis rounded off to the nearest integer subject to minimum subscription amount per subscriber as specified in sub-regulation (14).(17)The REIT shall allot units or refund application money, as the case may be, within twelve working days from the date of closing of the issue.(18)The REIT shall issue units only in dematerialized form to all the applicants.(19)The price of REIT units issued by way of public issue shall be determined through the book building process or any other process in accordance with the circulars or guidelines issued by the Board and in the manner as may be specified by the Board.(20)The REIT shall refund money, -(a)to all applicants in case it fails to collect subscription amount of exceeding [ninety] [Substituted 'seventy five' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] per cent. of the [fresh] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] issue size as specified in the [*] [Omitted 'initial' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] offer document [*] [Omitted 'or follow-on offer document' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).];(b)to applicants to the extent of oversubscription in case the moneys received is in excess of the extent of over-subscription as specified in the [***] [Omitted 'initial offer document or follow-on' by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] offer document:Provided that right to retain such over subscription cannot exceed twenty five per cent.of the issue size;[Provided further, that the offer document shall contain adequate disclosures towards the utilisation of such oversubscription proceeds, if any, and such proceeds retained on account of oversubscription shall not be utilised towards general purposes.] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).](c)to all applicants in case the number of subscribers to the initial offer forming part of the public is less than two hundred.(21)If the manager fails to allot, or list the units, or refund the money within the specified time, then the manager shall pay interest to the unit holders at fifteen per cent. per annum, till such allotment/listing/refund and such interest shall not be recovered in the form of fees or any other form payable to the manager by the REIT.(22)Units may be offered for sale to public,-(a)if such units have been held by the existing unit holders for a period of at least one year prior to the filing of draft offer document with the Board:Provided that the holding period for the equity shares [, compulsorily convertible securities (from the date such securities are fully paid-up)] [Inserted by Notification No. SEBI/LAD-NRO/GN/2017-18/022, dated 15.12.2017 (w.e.f. 26.9.2014).] or partner ship interest in the [holdco and/or] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).] SPV against which such units have been received shall be considered for the purpose of calculation of one year period referred in this sub-regulation;[Provided further that the compulsorily convertible securities, whose holding period has been included for the purpose of calculation for offer for sale, shall be converted to equity shares of the holdco or SPV, prior to filing of offer document.] [Inserted by Notification No. SEBI/LAD-NRO/GN/2017-18/022, dated 15.12.2017 (w.e.f. 26.9.2014).](b)subject to other circulars or guidelines as may be specified by the Board in this regard.(22A)[ The amount for general purposes, as mentioned in objects of the issue in the draft offer document filed with the Board, shall not exceed Ten per cent of the amount raised by the REIT by issuance of units.] [Inserted by Notification No. SEBI/L.A.D.-NRO/GN/2016-17/022, dated 29.11.2016 (w.e.f. 26.9.2014).](23)If the REIT fails to make its initial offer within three years from the date of registration with the Board, it shall surrender its certificate of registration to the Board and cease to operate as a REIT:Provided that the Board, if it deems fit, may extend the period by another one year:Provided further that the REIT may later re-apply for registration, if it so desires.(24)The Board may specify by issue of guidelines or circulars any other requirements, as it deems fit, pertaining to issue and allotment of units by a REIT.
