Mumbai, Nov 2 (IANS) Capital markets regulator SEBI on Monday allowed Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) to issue depository receipts (DRs) backed by their units and list them on exchanges in GIFT City’s International Financial Services Centre (IFSC), creating an additional avenue for attracting overseas investment.
In separate circulars, the Securities and Exchange Board of India (SEBI) laid down a detailed framework governing the issuance and listing of DRs by REITs and InvITs.
The permissible international exchanges for such listings will be India International Exchange (India INX) and NSE International Exchange, both operating from GIFT City.
Depository receipts are foreign currency-denominated instruments issued by a foreign depository against underlying units held with a domestic custodian.
The move is expected to enhance the global visibility of Indian REITs and InvITs while broadening their access to international capital.
Under the new framework, any fresh issuance of DRs will require prior approval from unitholders, with at least 75 per cent of the votes cast supporting the proposal.
However, this requirement will not apply when a REIT or InvIT undertakes an initial offer of units and simultaneously issues DRs for listing on an international exchange.
Subsequent DR issuances within an already approved limit will also not require fresh unitholder approval.
SEBI has mandated that where existing unitholders transfer their units for the purpose of issuing DRs, all existing unitholders must be provided an equal opportunity to participate in the offer.
The regulator has also clarified that DR holders and their beneficial owners cannot be residents of India.
Responsibility for ensuring compliance with this requirement will rest with the DR holders and their beneficial owners.
To safeguard market integrity, SEBI has prescribed eligibility conditions for REITs and InvITs seeking to issue DRs.
The investment trusts, their directors, promoters, partners and unitholders transferring units must not be barred by SEBI from accessing the securities market, nor should they be classified as wilful defaulters or fugitive economic offenders.
Additionally, the regulator said that none of the related parties, directors, promoters or partners should be associated as promoters or directors with any entity that has been prohibited from accessing the capital markets.
These restrictions, however, will not apply where a previous SEBI debarment has expired before the filing of the relevant offer document.
The framework requires the manager of a REIT or the investment manager of an InvIT to appoint a merchant banker to oversee compliance with all regulatory requirements relating to DR issuance.
The merchant banker will also be responsible for submitting a compliance report to the board of the manager or investment manager.
–IANS
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