Market regulator Securities and Exchange Board of India (SEBI) decided to amend the regulations or creation of new regulatory framework, for the facilitation of small & medium real estate investment trusts (SM REITs) with an asset value of at least Rs50 crore vis-à-vis minimum asset value of Rs500 crore for existing REITs. The framework for SM REITs is expected to contribute to the growth and acceptance of this innovative form of property ownership, aligning with established practices in developed nations.
SEBI also approved a proposal to provide impetus to fund-raising by not-for-profit organisations (NPOs) on the social stock exchange (SSEs), including a reduction in minimum issue size in case of public issuance of zero coupon zero principal instruments (ZCZP) by NPOs on SSE from Rs1 crore to Rs50 lakh.
The SEBI board, at its meeting last week, also approved reducing the minimum application size in case of public issuance of ZCZP by NPOs on SSE from Rs2 lakh to Rs10,000 to enable wider participation of subscribers including retail. NPOs are permitted to disclose past social impact reports in the fund-raising document as per their existing practice subject to disclosure of key parameters such as the number of beneficiaries, cost per beneficiary and administrative overheads.
Further, the market regulator approved a regulatory framework for index-providers to foster transparency and accountability in the governance and administration of financial benchmarks in the securities market.
"The regulations will provide a framework for registration of index providers which license 'significant indices' that shall be notified by SEBI based on objective criteria. The regulatory framework which is in accordance with IOSCO principles for financial benchmarks shall only be applicable to 'significant indices'," the market regulator says.
According to the market regulator, SM REITs should have the ability to create a separate scheme or schemes for owning real estate assets through special purpose vehicles (SPVs) constituted as companies.
"The regulatory framework approved by the board for SM REITs, inter - alia, provides for the structure of SM REITs, migration of existing structures meeting certain specified criteria, obligations of the investment manager including net worth, experience and minimum unitholding requirement, investment conditions, minimum subscription, distribution norms, and valuation of assets," it added.
Additionally, the board granted approval to proposals for facilitating ease of compliance and to strengthen the protection of the interest of investors in alternative investment funds (AIFs).
SEBI says, any fresh investment made by an AIF, beyond September 2024, will be held in dematerialised form. The existing investments made by AIFs have been exempted from the said requirement, except in a few cases.
Further, the mandate for appointment of a custodian, currently applicable to schemes of category-III AIFs and to schemes of category-I and II AIFs with a corpus of more than Rs500 crore, is extended to all AIFs.
"AIFs may appoint a custodian who is an associate of manager or sponsor of the AIF, subject to conditions similar to those prescribed under SEBI (Mutual Funds) Regulations for permitting related party of sponsor of a mutual fund (MF) to act as its custodian. The Board also noted that the cost of compliance to the schemes coming under the said mandate was an average of about Rs88,000 per annum for availing custodial services, based on analysis of sample data," SEBI says.