Last Updated: February 25, 2023, 08:34 IST
Sebi famous that many of the sponsors have vital shareholding in managers of REITs/InvITs which provides them the correct to nominate administrators
Stakeholders can submit their feedback on the session paper until March 8.
Sebi has proposed adjustments to guidelines governing REITs and InvITs whereby sponsors will probably be required to personal a sure share of models in these funding autos.
Coming out with a session paper on the topic, the markets regulator stated the adjustments are being proposed retaining in thoughts the curiosity of unit holders and the structural vulnerabilities related to absence of a sponsor for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).
The watchdog has advised that the sponsors of REITs/InvITs ought to maintain 15 per cent of the capital for a interval of three years from the date of itemizing as there is no such thing as a obligatory unit holding requirement after three years.
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It has additionally been proposed to mandate sponsors to carry 5 per cent of the unit capital after 3-5 years, 3 per cent from 5-10 years, 2 per cent from 10-20 years and 1 per cent after 20 years.
“… it’s felt that there’s a have to have a minimum of one sponsor all through the lifetime of the REIT/ InvIT and the sponsor wants to carry sure share of models on a perpetual foundation as a way to guarantee that there’s some alignment of curiosity with the unitholder,” Sebi said in the consultation paper dated February 23.
As the REIT/InvIT industry is in a nascent stage and continuously evolving, there is a need to have at least one sponsor throughout the life of the investment managers, it added.
Sebi noted that most of the sponsors have significant shareholding in managers of REITs/InvITs which gives them the right to appoint directors and also has a say in the financing related decisions of the investment managers especially in debt financing.
According to the regulator, a sponsor of a REIT/InvIT whose units have been listed on the stock exchanges for a period of three years can be permitted to declassify as the sponsor subject to certain conditions, including that there has to be a new inducted sponsor in place of existing sponsor getting declassified.
At present, there are 5 REITs and 19 InvITs registered with Sebi. Out of them, 3 REITs and 15 InvITs have raised funds through initial offer and/or further offer.
Stakeholders can submit their comments on the consultation paper till March 8.
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