The Securities and Exchange Board of India (SEBI) has issued an immediately effective framework for depository receipts (DRs) backed by real estate investment trust (REIT) units, implementing its board’s September approval of enabling provisions. Eligible REITs may issue new units or facilitate transfers by existing unitholders to support foreign currency denominated DRs. Listings are restricted to India International Exchange and NSE International Exchange in India’s International Financial Services Centre. DR holders and their beneficial owners must not be resident in India. Fresh DR offerings require prior unitholder approval by at least 75% of votes cast. Exceptions cover offerings alongside an initial domestic listing and subsequent offerings within an already approved limit. Where existing units support a fresh DR offering, all existing unitholders must have an opportunity to tender their units. Issue or transfer prices cannot fall below the applicable price for the corresponding domestic issuance route. Managers must appoint a merchant banker to oversee issuance compliance and maintain minimum public unitholding, with units deposited for DR issuance classified as nonpublic holdings. Applicable holding limits aggregate domestic units with units underlying DRs, including holdings of beneficial owners and, where required, persons acting in concert. Foreign depositories may issue receipts only after the domestic custodian confirms receipt of the underlying units. Voting rights must follow instructions from DR holders, and public disclosures on the international exchanges must also be filed with domestic recognized exchanges within 24 hours.
SEBI issues framework for depository receipts on REIT units in India’s IFSC
Following its board’s September approval, the Securities and Exchange Board of India has issued an immediately effective framework for depository receipts on real estate investment trust units, restricted to two exchanges in India’s International Financial Services Centre. Holders and beneficial owners must be nonresidents, while fresh offerings generally require approval by at least 75% of votes cast. The rules impose domestic pricing floors, aggregate domestic and underlying receipt holdings for applicable limits, and exclude deposited units from public unitholding.