On February 20, 2025, the Securities Exchange Board of India (“SEBI”), issued a consultation paper on the amendment to Master Circular for Infrastructure Investment Trusts (“InvITs”) and Master Circular for Real Estate Investment Trusts (“REITs”) originally issued on May 15, 2024. (“Consultation Paper”)[1]. The Consultation Paper invites public comments and suggestions, to be submitted at the latest by March 13, 2025.
The key proposals under the said Consultation Paper include:
1. Review of Lock-in Provisions: SEBI has proposed modifications to the lock-in requirements applicable to the preferential issue of units by REITs and InvITs.
The table below outlines a comparison of the current and proposed lock-in provisions for InvITs.
| Sl. No. | Aspect | Current Lock-in Provisions (Para 7.6.1 of Master Circular – May 15, 2024) | Proposed Lock-in Provisions |
| (a) | Lock-in for Sponsor(s) and Sponsor Group(s) | (i) 3 (three) years from the date of trading approval, provided 25% (twenty-five percent) of total unit capital shall be locked in for 3 (three) years. (ii) Units exceeding 25% (twenty-five percent) of total unit capital shall be locked in for 1 (one) year. | (i) 3 (three) years for 15% (fifteen percent) of units if the sponsor or its associate is the project manager for at least 3 (three) years. (ii) However, 25% (twenty five percent) of allotted units shall be locked in for 3 (three) years, if the abovementioned project manager condition is not met. (iii) The remaining units allotted to sponsor(s) and sponsor group(s) shall be locked in for 1 (one) year. |
The table below outlines a comparison of the current and proposed lock-in provisions for REITs:
| Sl. No. | Aspect | Current Lock-in Provisions (Para 10.6.1 of Master Circular – May 15, 2024) | Proposed Lock-in Provisions |
| (b) | Lock-in for Sponsor(s) and Sponsor Group(s) | 3 (three) years from the date of trading approval, provided, that units not more than 25% (twenty-five percent) of the total unit capital of the REITs shall be locked in for 3 (three) years from the date of trading approval. The units exceeding 25% (twenty-five percent) of the total unit capital shall be locked in for 1 (one) year from the date of trading approval. | 3 (three) years for 15% (fifteen percent) of units allotted to sponsor(s) and sponsor group(s). The remaining units shall be locked in for 1 (one) year from the date of trading approval. |
2. Guidelines for Follow-on Offers: SEBI has proposed to establish clear guidelines for follow-on offers by publicly offered InvITs and REITs, to enhance market participation and transparency.
This initiative underscores SEBI’s ongoing efforts to refine the regulatory framework for REITs and InvITs, promoting a greater efficiency and investor confidence in the sector.
[1] https://www.sebi.gov.in/reports-and-statistics/reports/feb-2025/consultation-on-draft-circulars-amendment-to-master-circular-for-infrastructure-investment-trusts-invits-and-master-circular-for-real-estate-investment-trusts-reits-dated-may-15-2024_92036.html