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Guidelines for issue of units by Unlisted Infrastructure Investment Trust (InvIT)

Unlisted Infrastructure Investment Trust

The article has emphasised the guidelines for issue of units by Unlisted Infrastructure Investment Trust- INVIT. The Infrastructure Investment Trust has been covered under the Chapter VIA of the SEBI (Infrastructure Investment Trust) Regulations, 2014[1]. The Regulations provide the framework for the private placement of units by INVITS, which were not eligible to be listed. The decision formed in favour of the Unlisted Infrastructure Investment Trust, where SEBI under the regulations 11(1) and Regulation 33 of the INVIT Regulation, for raising funds.

SEBI vide circular SEBI/HOD/DDHS/CIR/P/2020/223 dated 4 November, 2020

According to the circular for Unlisted Infrastructure Investment Trust, it provided the mechanism for raising funds for unlisted INVITS through right issue of units. The right issue of shares shall mean offering of units by an unlisted Infrastructure Investment Trust to the unit holders as on the record date fixed for the said purpose.

Procedure for right issue of shares of the Unlisted Infrastructure Investment Trust

Procedure for right issue of shares of the Unlisted Infrastructure Investment Trust

A. Conditions of Issuance – Rights issue cannot be made for the INVIT unless the following conditions are not met-

  1. A resolution of the Board of Directors of the Investment manager approving the rights issue of units.
  2. The promoter must not be declared as a fugitive economic offender.
  3. The promoter or director should not be debarred from accessing the securities market by SEBI.
  4. The promoter or director should not be debarred from accessing the capital market.
  5. No one should be trustee or partner or director of the sponsor or investment manager or trustee of the INVIT.

B. Underwriting- The Unlisted Infrastructure Investment Trust should appoint underwriters to underwrite a particular issue as per SEBI Guidelines.

C. Letter of Offer

1. The Investment manager has to file the letter of offer with the Board at least five days before the opening of the issue of units of Unlisted Infrastructure Investment Trust.

2. The investment manager shall ensure the disclosures made in the letter of offer are true and accurate, and it is in accordance with the INVIT Regulations.

3. The letter of offer shall be furnished to the Board in soft copy.

D. Application- The form shall be made by the investment manager and he shall prepare the details for distribution of the application form to all the unit holders at least five days before the issue of units.

E. Pricing of Units- The issue price is disclosed in the offer letter.

F. Timelines- The opening of the rights issue shall be three months before the record date. The rights issue shall be kept open for the three to fifteen working days.

G. Manner of Issuance of Units-The units shall be issued in dematerialised form. The right entitlement shall be credited to the Demat account of the unit holders before the date of opening of the issue. The entitlement right shall allow the person concerned to renounce the units offered to him or her in their favour.  The letter of offer and notice to unit holders sent shall contain the statement to this effect.

H. Allotment-The minimum allotment to any investor shall be Rs. 1.The allotment shall be to eligible unit holders who applied for the rights entitlement either in full or in part and also who renounces. The allotment shall be in equitable basis. The allotment to the additional units shall be on proportionate basis. The allotment to underwriter appointed shall be at the discretion of the Board of Directors of the investment manager, subject to the disclosure in the letter of offer.

I. Restrictions on further capital issue-The Unlisted Infrastructure Investment Trust shall not make any additional issue of the units in any manner during the period between the date of filing the letter of offer with the Board and the allotment of the units offered through the letter.The INVIT shall file the allotment report of the allottee within 15 days of the closing of issue.

Interpretation of the Guidelines of Unlisted Infrastructure Investment Trust

The SEBI has issued guidelines for the unlisted Infrastructure Investment Trust for the high net worth individuals in a long term. The guidelines for investments which is not for the retail investors as the minimum capital requirement is 1 Crores. It has been assessed from the long term effect that infrastructure as a sector provides a meaningful return to the investors. The government efforts to enable unlisted INVIT to raise funds through right issue of their units. The market regulators issued guidelines on November 4, 2020.

  1. It has been said by SEBI that-“For the purpose of this circular ‘rights issue’ shall mean an offer of units by an unlisted InvIT to the unit holders of the InvIT as on the record date fixed for the said purpose,”
  2. Application by Investment Manager- The investment manager shall prepare the application form and also make arrangements for the distribution of the same along with the letter of offer to all unit holders. The investment managers also decide the issue price on behalf of the InvIT before determining the record date. The minimum allotment to any investor should be Rs 1 crore.
  3. Private Unlisted Companies- Private unlisted InvITs are now given the same status as public listed InvITs making them entitled to the same tax treatments provided under the Act. This will help increase liquidity as many investors are stuck due to the dry secondary market liquidity.


It can be concluded that the structure of Unlisted Infrastructure Investment Trust is similar to that mutual fund, where there are sponsors, trustees, and investment managers. The physical assets possessed by them are electric power plants, airports. The incomes from these assets are distributed to investors post expenses. The infrastructure company’s objective is that once the project is completed , the same can be transferred to a special purpose vehicle that would run and manage the assets. It is delinking the construction stage from the post-construction stage.

Read our article:How will the budget affect InvITS and REITs?


Sonal Pruthi

She is B.Com (H), LL.B LLM, Cs (Module 2) And Certification In Cyber Law From ILI Qualified. She has Been A Legal Teacher In The Previous Organization. My Strength Is My Expertise Knowledge In Civil Laws, Corporate Law And Tax Laws. I Have Been Legal Teacher And Legal Trainer In The Past Organization. Her Knowledge About The Subjects Have Expanded Due To Teaching Number Students From Various Universities All Over India.

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