SEBI Carried Out Regulatory Changes Towards Fractional Investing for SM REITs and Index Providers, Fresh Investment by AIFs in Dematerialised Form November 25, 2023
Published in: Investment Funds
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Securities and Exchange Board of India (“SEBI”), in its board meeting held on November 25, 2023, approved the following decisions:
- Amendments to SEBI (Real Estate Investment Trusts) Regulations, 2014, so as to create a regulatory framework for facilitating Small and Medium Real Estate Investment Trusts (“SM REITs”). SM REITs with an asset value of at least INR 50 crores, shall have the ability to create separate scheme(s) for owning real estate assets through special purpose vehicle(s) constituted as companies. This is a departure from the present requirement of a minimum asset value of INR 500 crores for existing REITs.
- Providing flexibility to not for profit organizations (“NPOs”) in raising funds through the social stock exchange (“SSE”) by reducing the minimum issue size in case of public issuance of zero coupon zero principal instruments by NPOs on SSE from INR 1 crore to INR 50 lakhs. The minimum application size in case of public issuance of zero coupon zero principal instruments has also been reduced from INR 2 lakhs to INR 10,000, thereby enabling wider participation of subscribers including retail.
- Introducing a regulatory framework for index providers with the objective of fostering transparency and accountability in governance and administration of financial benchmarks in the securities market. The regulatory framework shall be in accordance with the International Organization of Securities Commissions (IOSCO) principles for financial benchmarks and the said regulations shall provide a framework for registration of index providers which license ‘Significant Indices’ notified by SEBI based on objective criteria.
- Mandating all Alternative Investment Funds (“AIFs”) to appoint a custodian. Presently, the mandate for appointment of a custodian applied to schemes of Category III AIFs and to schemes of Category I and II AIFs with a corpus more than INR 500 crores. Further, any fresh investments made by AIFs, beyond September 2024, shall be compulsorily held in dematerialised form. These proposals have been approved towards facilitating ease of compliance and to strengthen protection of investor interest in AIFs.
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