Sebi pitches change in rules for REITs, InvITs; sponsors to own some units

Sebi has proposed changes to rules governing REITs and InvITs whereby sponsors will be required to own a certain percentage of units in these investment vehicles.

Coming out with a consultation paper on the subject, the markets regulator said the changes are being proposed keeping in mind the interest of unit holders and the structural vulnerabilities associated with absence of a sponsor for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

The watchdog has suggested that the sponsors of REITs/InvITs should hold 15 per cent of the capital for a period of three years from the date of listing as there is no mandatory unit holding requirement after three years.

It has also been proposed to mandate sponsors to hold 5 per cent of the unit capital after 3-5 years, 3 per cent from 5-10 years, 2 per cent from 10-20 years and 1 per cent after 20 years.

"... it is felt that there is a need to have at least one sponsor throughout the life of the REIT/ InvIT