Sebi issues framework for depositary receipts on REITs and InvITs units
The new rules allow foreign investors to purchase units of real estate and infrastructure investment trusts through specific overseas exchanges.
The Securities and Exchange Board of India (Sebi) on Monday released a framework for depositary receipts to enable foreign investors to invest in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) via selected international exchanges, according to The Economic Times.
The framework, which was proposed in August and approved in September, aims to draw more foreign capital into these sectors. Under this system, a foreign institution issues instruments in foreign currency against securities held by a domestic custodian, which can then be traded in overseas markets.
REITs and InvITs that intend to list in India while simultaneously issuing depositary receipts must obtain permission from both the Indian exchange and the international exchange involved.
The framework states that any new issuance of depositary receipts requires approval from at least 75 per cent of unitholders. Additionally, units issued for these receipts cannot be priced lower than the price provided to Indian investors for a similar offering.
For privately placed InvITs, any new depositary receipt issues can only be subscribed to by corporate bodies and foreign institutional investors. While REITs and InvITs listed in India already accept foreign investment, such investments remain subject to central bank and government rules.