SEBI Extends Time for Comments on Proposal on REITs, InvITs Sponsors

REITs and InvITs are relatively new investment vehicles in the Indian context. (File)

New Delhi:

Sebi, the capital markets regulator, today extended the timeline to March 15 for submitting public comments on a proposal regarding greater accountability for investment vehicle sponsors – REITs and InvITs.

The regulator had issued a consultation paper on Feb. 23 on holding sponsors in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) and on March 8 asked for public comment on the matter.

“It has been decided to extend the timeline for submission of comments to March 15, 2023,” the Securities and Exchange Board of India (Sebi) said in a public notice.

In its consultation document, the regulator proposed changes to the rules for REITs and InvITs, requiring sponsors to own a certain percentage of the units in these investment vehicles.

The changes have been proposed taking into account the interests of participants and the structural vulnerabilities associated with the lack of a sponsor for REITs and InvITs.

The watchdog suggested that the sponsors of REITs/InvITs should hold 15 percent of the capital for a period of three years from the date of listing, as there is no mandatory participation requirement after three years.

It was also proposed to authorize sponsors to hold 5 percent of the share capital after 3-5 years, 3 percent from 5-10 years, 2 percent from 10-20 years, and 1 percent after 20 years.

According to Sebi, the REIT/InvIT industry is in a nascent stage and constantly evolving, there is a need for at least one sponsor over the life of the investment managers.

REITs and InvITs are relatively new investment vehicles in the Indian context but are extremely popular in global markets.

While a REIT includes a portfolio of commercial real estate assets, much of which is already leased, InvITs include a portfolio of infrastructure assets, such as highways and power transmission assets.

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