In a recent event held in the financial capital,Market Regulator SEBI made a decision to amend REITs as well as InvITs regulations henceforth relaxing the norms in terms of making it look more attractive so that capital are raised in a uniform manner.
Earlier, the regulator made several attempts to attract the due attention from various firms and enterprises scattered all over the country. But in vain as the attempt had to halt so as to give further relaxation to its approach. In order to facilitate the growth of REITs i.e. Real Estate Investment Trusts along with InvITs as in Infrastructure Investment Trusts.
The board held a meeting in the financial capital on Friday, September 23rd, decided to ease the norms or regulations for further notions. Although the decision was taken after an extensive public suggestion as well as consultations. Previously when it chose to regulate the respective bodies in 2014, it allowed to set up and list out few platforms such as trusts, some of them quite popular in the capital market.
The approval has been given, confirmed, to 3 firms as in MEP, GMR and IRB Infrastructure so as to launch InvITs. As of now, none of the trust has been approved to make these platforms more attractive. The government, on the other hand, provided certain tax benefits in the General Budget discussed afew days back. However, the Centre allows investing in two level structure through the hold in the companies. This all depends on the matter that it is variedly subjected to limited shareholdings in the firm or the underlying SPVs.
The stakeholding firms will be allowed to distribute cent-percent cash flows released from the SPV (Special Purpose Entity) and at least 90% of the remaining capital. It allowed the Trusts to invest as much as 20% in under-construction projects along with a maximum number of 10% allowed, at present. It also removed the limitation in the number of sponsors thus permitting to appoint majority directors in SPV.
The permitted to rationalisethe basic requirements under the Related Party Transactions, in which almost 60% of stakeholders out of the related parties members have to go through various party transactions. Further, those who are not members which are 75% in number would require approval for passing limited resolutions such as delisting of units,change in investment manager and investment strategy. Moreover, the market regulator explained the actual meaning and motive of real estate properties as per the regulations.