REITs fractional ownership get Sebi leg up

The Securities and Exchange Board of India has decided to promote investments through Small and Medium REITs, enhance measures to protect interest of investors in Alternative Investment Funds (AIFs), provide flexibility for not-for-profit organisations in raising funds through social stock exchanges and also put in place regulatory framework for index providers.
The decisions were approved at the meeting of the board of the Securities and Exchange Board of India (Sebi) on Sturday. On the issue of changes in delisting norms, Sebi decided to wait for some more time and study more data.

Speaking after the meeting,  Sebi Chairperson Madhabi Puri Buch said the objective of the Small and Medium Real Estate Investment Trusts (SM REITs) is to help expand the market so that more retail investors can have fractional ownership in REIT units.

There was some relief for investors in Non-profit organisations. The minimum issue size in the case of public issuance of Zero Coupon Zero Principal Instruments (ZCZP) by NPOs on the exchange will be reduced to Rs 50 lakh from Rs 1 crore and the minimum application size will be cut to Rs 10,000 from Rs 2 lakh. This move is expected
to enable wider participation from the retail segment.

Among other decisions, a regulatory framework will be introduced for the index providers to foster transparency and accountability in governance and administration of financial benchmarks in the securities market. The regulations for index providers will provide a framework for registration of such entities that license ‘significant indices’ which will be notified by Sebi based on objective criteria.
Buch said the decision to have regulations for index providers was mainly driven by increasing inflows into passive funds, which have taken off in a big manner in the West.

To facilitate ease of compliance and strengthen investor protection in Alternative Investment Funds (AIFs), all the fresh investments made by an AIF after September 2024 should be held in demat form, as per the regulator.
Sebi has approved amendments to AIF rules, with some exceptions. Also, the mandate for the appointment of custodians will be extended to all AIFs.

(With inputs from PTI)