Sebi notifies revised norms for REITs, InvITs

Seeking to make them attractive options for raising capital, Sebi today notified revised and easier regulations for REITs and InvITs.

To facilitate growth of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), the board of Sebi had approved relaxations to existing norms in September after extensive public consultations.

In this regard, the markets regulator has notified amended regulations pertaining to REITs and InvITs.

New provisions, including those related to use of funds raised by these trusts, have been introduced.

As per the revised norms, “general purposes” can include identified purposes for which no specific amount is allocated in the offer document. This will be subject to the condition that any issue related expenses will not be considered as a part of general purpose “merely because no specific amount has been allocated for such expenses in the offer document”.

It has been made clear that there should be no multiple classes of units of REITs and InvITs while subordinate ones can be issued only to sponsors and its associates. This is also subject to the requirement that such subordinate units should carry only inferior voting or any other rights compared with other units.

Among others, these trusts will have to refund subscription amount along with interest to allottees in case they don’t receive listing permission from the stock exchange.

“In the event of non-receipt of listing permission from the stock exchange(s) or withdrawal of observation letter issued by the board, wherever applicable, the units shall not be eligible for listing,” the regulations stated.

In such cases, REITs and InvITs will have to “refund the subscription monies, if any, to the respective allottees immediately along with interest at the rate of 15 per cent per annum from the date of allotment”.

The Securities and Exchange Board of India (Sebi) notified the REIT and InvIT regulations that allowed setting up and listing of such trusts in 2014.

Securities and Exchange Board of India ( SEBI )