Background
The Offer for Sale (OFS) framework allows shares and units of REITs and InvITs to be sold through stock exchanges, subject to certain conditions. One such condition is a cooling-off period that restricts purchases and sales before and after an OFS, depending on the liquidity of the securities. This framework is set out in SEBI’s Master Circular for Stock Exchanges and Clearing Corporations dated 30 December 2024. By its circular dated 2 November 2026, SEBI has reduced this period for privately listed InvITs with illiquid units with immediate effect.
This article explains what the cooling-off period means, why it is linked to liquidity, and the reasons for this relaxation. It also examines how the shorter period may help investors plan exits and manage their holdings.
Understanding the Cooling-off Period
A cooling-off period is a specified time before and after an OFS during which the seller must not otherwise buy or sell the same securities, subject to applicable exceptions. The general period is two weeks for most liquid securities, four weeks for liquid securities and twelve weeks for illiquid securities. For example, under the revised eight-week requirement, a unitholder selling illiquid privately listed InvIT units through OFS must ordinarily avoid other purchases or sales of those units for eight weeks before the offer and eight weeks after its closure.
This gap helps separate the OFS from the seller’s other transactions and supports fair price discovery. The link with liquidity is understandable: where trading is frequent, the market can generally absorb a transaction more easily; where trading is thin, even a relatively small transaction may significantly influence the price. A longer gap therefore provides greater separation in illiquid securities. SEBI identifies cooling-off as a safeguard for the OFS mechanism; this explanation of its connection with price impact is an interpretation of the framework.
What Has Changed?
The circular modifies paragraph 19.2 of Chapter 1 of the Master Circular dated 30 December 2024 by introducing a specific cooling-off period for illiquid units of privately listed InvITs.
| Particulars | Earlier requirement | Revised requirement |
| Cooling-off period before the OFS | 12 weeks | 8 weeks |
| Cooling-off period after the OFS | 12 weeks | 8 weeks |
| Securities covered by this relaxation | Illiquid units of privately listed InvITs | Same category |
The change reduces the restriction by four weeks on each side of the OFS. It is a targeted relaxation for illiquid privately listed InvIT units, rather than a general reduction for all REITs and InvITs. The circular continues to provide that retail-investor provisions do not apply to OFS transactions involving privately listed InvITs and that such offers remain open for one day.
Why Was the Period Reduced?
The background appears in Section 6 of SEBI’s consultation paper dated 6 August 2026 on measures towards ease of doing business for REITs and InvITs. The paper noted that the ₹25 lakh trading lot applicable to privately listed InvITs creates structural liquidity constraints. Participation is consequently concentrated largely among institutional investors, body corporates and high-net-worth individuals, and trading volumes may remain thin.
The Bharat InvITs Association represented that applying equity-oriented cooling-off timelines did not adequately recognise these structural constraints or the absence of retail participation. Taking these submissions and the recommendations of the Hybrid Securities Advisory Committee into account, SEBI proposed reducing the period from twelve to eight weeks to facilitate ease of doing business. The November circular implements that proposal.
Conclusion: Greater Flexibility for Investors
The shorter period may make OFS a more practical exit route for existing unitholders. Where a recent transaction attracts the restriction, an investor may become eligible to undertake an OFS four weeks earlier and may also resume otherwise restricted dealings four weeks sooner after the offer, subject to other applicable requirements. This could help investors align stake sales with fund tenures, cash requirements and portfolio rebalancing.
These are potential benefits, rather than assured outcomes. An OFS transfers existing units, with proceeds accruing to the seller; its immediate benefit is therefore greater flexibility for selling unitholders. Easier exits may also encourage investor interest in privately listed InvITs. However, sustained improvement in liquidity will still depend on willing buyers, pricing and market participation. The amendment makes transactions easier to plan, while retaining an eight-week safeguard on either side of the OFS.
The article is written by Ms. Rutuja Umadikar.