In Brief
The Securities and Exchange Board of India (SEBI) has released a comprehensive regulatory framework enabling Real Estate Investment Trusts (REITs) to issue foreign-currency Depository Receipts (DRs) against underlying rupee-denominated units. The framework facilitates foreign capital raising in permissible offshore jurisdictions and GIFT City IFSC, requiring prior approval from at least 75% of unitholders for fresh issuances.
The Securities and Exchange Board of India (SEBI) has notified an enabling operational framework governing the issuance of Depository Receipts (DRs) against units of listed Real Estate Investment Trusts (REITs). Under the guidelines, Indian REITs can tap into foreign capital markets either through the issuance of fresh units or through the transfer of existing units held by unitholders via an Offer-for-Sale (OFS) structure. The underlying domestic units will be deposited with an Indian domestic custodian, against which foreign depositories in permissible jurisdictions—including international stock exchanges located in the International Financial Services Centre (IFSC) at GIFT City—will issue foreign-currency-denominated DRs. To protect existing investors, fresh issuances of units for DRs necessitate prior approval with at least 75% of votes cast in favor by unitholders. Furthermore, the framework establishes stringent eligibility safeguards: neither the REIT, its parties (manager, trustee), directors, nor transferring unitholders can be willful defaulters or fugitive economic offenders, and DR holders or beneficial owners cannot be persons resident in India.
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