SEBI to streamline governance norms for REITs and InvITs

In a bid to streamline procedures, remove ambiguity and ensure compliance the Securities and Exchange Board of India (SEBI) is considering proposals to introduce governance norms, akin to those in place for listed companies, for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). Although these entities already follow the norms, there is no formal compulsion for them to do so. Therefore, by creating a formal requirement, SEBI hopes to remove any uncertainty that might exit.

A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing properties. In India we have three listed REITs; Embassy Office Parks REIT launched in 2019, Brookfield REIT and Mindspace REIT launched in 2020. An Infrastructure Investment Trust (InvITs) are similar to mutual fund. It raises small amounts of funds through direct investment from individuals or institutional investors. According to data published on the SEBI website, there are 19 registered InvITs in India.

In another decision made this year SEBI will allow Alternative Investment Funds (AIFs) to participate in Credit Default Swaps not only as protection buyers but also as protection sellers. A Credit Default Swap (CDS) is a type of derivative that transfers credit exposure of fixed income products. They can be used for speculation, hedging or as a form of arbitrage. By making this allowance SEBI hopes to provide AIFs with greater investment flexibility and facilitate deepening of the domestic corporate bond market.

Next (Maharashtra RERA issues directive regarding fixed sale deed terms)

SEBI to streamline governance norms for REITs and InvITs

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