SEBI amends norms for REITs, InvITs

In order to make REITs and InvITs more attractive, markets regulator Securities and Exchange Board of India (SEBI) said on Wednesday that they will have to provide a mechanism for resolution of disputes with their shareholders and partners in the holding company. SEBI has also amended REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) regulations in order to facilitate the growth of such trusts. In separate notifications posted on its website, Sebi said: "Shareholders' agreement or partnership agreement shall provide for an appropriate mechanism for resolution of disputes between the InvIT and the other shareholders or partners in the holdco and/or the SPV (special purpose vehicle)." It said the provisions of these regulations will prevail in case of inconsistencies between such agreement and the obligations cast upon an InvIT and REIT. With regard to InvIT, the regulator said the trust will have to file the final placement memorandum with Sebi within 10 working days from the date of listing of the units issued therein. "The manager, in consultation with the trustee, will appoint at least such number of nominees on the board of directors or the governing board of such SPVs, as applicable, which are in proportion to the shareholding or holding interest of the REIT in the SPV," Sebi said in the case of REIT. The regulator had notified REITs and InvITs Regulations in 2014, allowing setting up and listing of such trusts which are very popular in some advanced markets. However, only two InvITs - IRB InvIT Fund and Indiagrid Trust - have got listed on stock exchanges so far and not a single REIT has been listed in the country.