SEBI changes how REITs and InvITs count the 75% unitholder approval needed for major decisions

SEBI has amended the Real Estate Investment Trusts (REIT) Regulations, 2014 and the Infrastructure Investment Trusts (InvIT) Regulations, 2014 to change how the 75 percent unitholder approval required for related-party transactions, borrowing beyond specified limits and other major decisions is calculated. Earlier, the regulations required approval 'from 75 percent of the unit holders by value', effectively measuring all eligible unitholders. Under the amendment, approval instead requires that votes cast in favour be at least 75 percent of the total votes actually cast on the resolution, excluding votes of parties related to the transaction where that exclusion already applied. This shifts the threshold from a fixed share of total unitholding to a share of those who actually vote.

Both sets of regulations also now permit depository receipts to be issued on REIT and InvIT units in a manner SEBI will specify, and both require that where a trust has multiple sponsors and one sponsor exits, the outgoing or continuing sponsor group must give dissenting unitholders an option to exit by buying their units, in a manner SEBI specifies. The REIT amendment additionally removes a carve-out that had limited the definition of 'common infrastructure' to composite real estate projects, industrial parks and special economic zones, and deletes a redundant disclosure requirement under Regulation 18(5)(k). Both sets of amendments took effect on their publication in the Official Gazette.