On Thursday, capital markets regulator Sebi extended the timetable to March 15 for public comments on a proposal to impose higher responsibilities with sponsors of investment vehicles, REITs and InvITs.
The regulator published a consultation paper on sponsors holding real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) on February 23 and is open for public comment until March 8.
“It has been decided to extend the time for submission of comments until March 15, 2023,” the Securities and Exchange Board of India (Sebi) said in an announcement.
In its consultation paper, the regulator proposed changing the rules governing REITs and InvITs to require promoters to own a certain percentage of units in these investment vehicles.
These changes were proposed considering the interests of unitholders and the structural weaknesses associated with the lack of sponsors for REITs and InvITs.
The regulator recommends that sponsors of REITs/InvITs should hold 15% of the capital within three years from the date of listing, as there is no mandatory unit holding requirement after three years.
It is also proposed to authorise promoters to hold 5% of the unit capital after 3-5 years, 3% after 5-10 years, 2% after 10-20 years and 1% after 20 years.
According to Sebi, the REIT/InvIT industry is nascent and growing, requiring at least one sponsor throughout the life of an investment manager.
REITs and InvITs are relatively new investment vehicles in India but are very popular in the global market.
REITs include a portfolio of commercial real assets, most of which are leased out, while InvIT consists of infrastructure assets, such as highways and transmission assets.