MUMBAI: Markets regulator Sebi board on Thursday approved a proposal to enable issuance of Depository Receipts (DRs) against units of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), in a move aimed at attracting more foreign capital into these investment vehicles.
DRs are foreign currency-denominated instruments issued by a foreign depository in a permissible jurisdiction against securities deposited with a domestic custodian in India.
“The board considered and approved the proposal of amending Sebi (Real Estate Investment Trusts) Regulations, 2014, and Sebi (Infrastructure Investment Trusts) Regulations, 2014, to provide an enabling provision for issuance of Depository Receipts (DRs) on units of REITs and InvITs,” the regulator said.
This will facilitate attracting foreign capital in REITs and InvITs via DRs, it added.
The Sebi board also approved changes to voting requirements under the REIT and InvIT regulations.
Currently, certain matters require approval from holders of at least 75 per cent of all outstanding units, irrespective of the number of unitholders participating in the vote.
The threshold will now be based on 75 per cent of the total votes cast, Sebi said, adding that the change will address difficulties arising from dispersed ownership and non-participation by some unitholders.
The regulator also approved changes to the framework governing exit offers in case of a change in sponsor.
In case one of multiple sponsors exits, the exit offer can be made either by the outgoing sponsor or its group entities, or by the continuing sponsor or its group entities.
Sebi also clarified that “dissenting unitholders” would mean only those who vote against the resolution and not those who do not participate in the voting.
Further, all units tendered under an exit offer will have to be accepted.
If the minimum public unitholding falls below the prescribed threshold following the offer, compliance will have to be restored within one year.
In another decision, the board also approved amendments to the Research Analysts Regulations to relax the requirement for Research Analysts and Research Entities to maintain recordings of communications with institutional investor clients.
The measure is aimed at facilitating ease of doing business and reducing compliance obligations related to maintaining records, Sebi said.
Additionally, the regulator also approved amendments to the Sebi (Vault Managers) Regulations, 2021, to expand and harmonise the regulatory framework governing vault managers and vaulting services for bullion underlying Sebi-specified bullion-related instruments.
The existing framework primarily covered vaulting services for gold underlying Electronic Gold Receipts (EGRs).
The amended framework will cover bullion underlying other Sebi-specified bullion-related instruments, including Gold and Silver Exchange Traded Funds (ETFs) and bullion derivatives.
The amendments will replace the EGR-specific framework with a product-neutral framework covering bullion-related instruments.
Sebi also approved an increase in the minimum net worth requirement for vault managers from Rs 50 crore to Rs 75 crore.
The framework will strengthen requirements relating to storage and safekeeping, segregation, reconciliation, security, insurance, governance and risk management.
Security requirements will also be strengthened to address risks including theft, burglary, fire, fraud, terrorism and cyber-attacks.
Vault managers will additionally be required to appoint a compliance officer.
Sebi said a consequential circular will be issued to operationalise the amended framework, including requirements relating to storage and safekeeping, quality standards, reconciliation, inspection, audit, insurance, security, infrastructure, risk management and grievance redressal.
