New Delhi, June 18: Markets regulator Sebi has put in place a framework for REITs(Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts), allowing declassification of the status of the sponsor of these emerging investment instruments.
Besides, the regulator has introduced the concept of inducted sponsors that could be any company or LLP or body corporate.
Sebi said that declassification of the status of a sponsor of a REIT and InvIT, whose units have been listed on the stock exchanges for three years, would be permitted after receiving an application from such investment vehicles. The permission is subject to certain guidelines including that the unit holder of such sponsor and its associates have taken together does not exceed 10 per cent of the outstanding units of the REIT or InvIT.
Among others, the manager of the REIT or InvIT is not an entity controlled by such sponsor or its associates, the sponsor or its associates are not fugitive economic offenders and approval of unitholders need to be obtained for declassifying the status of the sponsor.
An initial offer of units by the REIT or InvIT should be made unless maximum subscription from any investor other than sponsor, its related parties and its associates will not be more than 25 per cent of the total unit capital.
"No person, other than sponsor(s), its related parties and its associates, shall acquire units of a REIT which taken together with units held by him and by persons acting in concert with him in such REIT exceeds 25 per cent of the value of outstanding REIT units unless approval from 75 per cent of unitholders by value excluding the value of units held by parties related to the transaction is obtained," Sebi said in similarly worded notifications concerning REIT and InvIT.
In case the required approval is not received, the person acquiring the units will have to provide an exit option to the dissenting unitholders.
The new regulations would come into force with immediate effect, the regulator said in a notification issued on Wednesday.
Sebi, further, mentioned that in case of any change in sponsor or inducted sponsor, or any change in control of such sponsor, approval from 75 per cent of the unitholders by value will be obtained. This should not include the value of units held by parties related to the transaction.
If such change does not receive the required approval, then sponsor or inducted sponsor will provide the dissenting unitholders an option to exit by buying their units, the regulator said.
Change in sponsor or inducted sponsor means any change due to entry of a new sponsor with or without exit of an existing sponsor, it added.
Sebi had first notified REITs and InvIT Regulations in 2014, allowing setting up and listing of such trusts which are popular in some advanced markets. However, to date, only a few InvITs and REITs have listed their units in India. Despite various relaxations given by the market regulator, these investment vehicles have failed to attract investors.