SEBI Proposes Depository Receipts For REITs And InvITs

The Securities and Exchange Board of India (SEBI) has proposed allowing the issuance of Depository Receipts (DRs) against units of Real Estate Investment Trusts (REITs) and publicly listed Infrastructure Investment Trusts (InvITs). This move aims to widen investment options for overseas investors and attract foreign capital.

The proposed framework will enable REITs and publicly listed InvITs to issue DRs in permissible overseas jurisdictions, allowing foreign investors to trade such instruments in foreign currency on permitted international exchanges. However, privately listed InvITs will be excluded from this framework.

SEBI has noted that units of REITs and InvITs qualify as 'permissible securities' under the Depository Receipts Scheme, 2014, and the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, permit persons residing outside India to invest in REIT and InvIT units. Despite this, there is currently no enabling provision or corresponding framework under SEBI's REIT and InvIT Regulations for such issuances.

To address this gap, SEBI has proposed inserting enabling provisions in the REIT Regulations and InvIT Regulations to allow DRs to be issued against units of REITs and publicly offered InvITs, subject to compliance with the regulations and conditions specified by the regulator.

The proposed framework is expected to provide an additional investment option for foreign investors and help attract foreign capital in REITs and InvITs. SEBI has sought public comments on the proposals by August 25.

The move is seen as a positive step towards increasing foreign investment in India's real estate and infrastructure sectors. It will provide foreign investors with greater flexibility and access to these markets, which is expected to boost investment and economic growth.

SEBI's proposal is part of its efforts to liberalize and deepen India's capital markets. The regulator has been working to simplify and clarify regulations, making it easier for foreign investors to participate in the Indian market.

The proposal is also expected to benefit Indian companies, as it will provide them with greater access to foreign capital and enable them to raise funds more easily. This, in turn, is expected to boost economic growth and development in the country.

Overall, SEBI's proposal to allow Depository Receipts for REITs and InvITs is a significant step towards increasing foreign investment in India and deepening the country's capital markets. It is expected to have a positive impact on the economy and provide greater opportunities for foreign investors and Indian companies alike.

The proposal is now open for public comment, and SEBI will consider the feedback before finalizing the regulations. The regulator's efforts to liberalize and deepen India's capital markets are expected to continue, with a focus on making it easier for foreign investors to participate in the Indian market.

In conclusion, SEBI's proposal to allow Depository Receipts for REITs and InvITs is a positive step towards increasing foreign investment in India and deepening the country's capital markets. It is expected to have a significant impact on the economy and provide greater opportunities for foreign investors and Indian companies alike.