SEBI eases norms for Real Estate Investment Trusts

The Securities & Exchange Board of India (“SEBI”) has in its Board meeting on 17th June 2016 issued a Consultation Paper for amendments to the SEBI (Real Estate Investment Trusts) (“REITs”) Regulations, 2014 in order to smoothen the process of registration of REIT as well as the process of launching the offer.

The Consultation Paper on REITs proposes certain changes and provides clarifications in the REIT Regulations on the following points:

  1. Removing the restriction on the Special Purpose Vehicle (“SPV”) (only in case of such SPV being a Holding Company) to invest in other SPVs holding the assets;
  2. Change in the number of sponsors;
  3. Rationalization of compliance with respect to Related Party Transactions requirements;
  4. Aligning minimum public holding requirement with Securities Contracts Regulation Rules;
  5. Allowing REITs to invest up to 20%, in under construction assets; and
  6. Responsibilities of trustee and its associates.

The consultation paper will be placed on SEBI website seeking public comments.

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