New Delhi: To deepen Indian capital markets, regulator Sebi’s board will consider proposals, on Friday, for relaxed norms for REITs and an easier set of compliance rules for foreign fund managers keen to relocate to India.
Among the changes, the regulator’s board is looking to examine a proposal to make Real Estate Investment Trusts (REITs) more attractive to investors by allowing them to invest a large portion of funds in under-construction assets, sources said.
Besides, REITs may be allowed to have a larger number of sponsors. Further, regulations regarding the minimum public offer size and related party transactions would also be considered.
Sebi will contemplate on a proposal to rationalise the requirements in the related party transactions, under which approval of 60 per cent unitholders apart from related parties, is required for passing a related party transaction.
Further, approval is required of 75 per cent unitholders, apart from related parties, for passing special resolutions such as change in investment manager, investment strategy and delisting of units.
However, Corporate Affairs Ministry may seek further details with regard to proposed amendments relating to the participation of directors in the board meetings considering related party transaction, sources said.
Proposing amendments to REIT, Sebi has referred to certain provisions of the Companies Act to which a complete alignment may not be possible to achieve the current threshold prescribed in the REIT regulations.
The Companies Act requires related party transactions up to certain threshold to be approved by the board, while transactions beyond this threshold need shareholders’ nod.
With regard to foreign fund managers willing to relocate to Indian shores, the Sebi board will consider allowing them to function as ‘Portfolio Managers’ under a simpler regulatory regime, a move that will make it easier for such entities to operate in India.
Besides, an existing Sebi-registered Portfolio Manager will also be allowed to act as Eligible Fund Manager (EFM) with prior intimation from Sebi and subject to certain conditions.
The Securities and Exchange Board of India (Sebi) would also present its annual accounts for the fiscal 2015-16 before its board, which comprises nominees from the government and RBI in addition to the whole-time and independent members.
Incidentally, it would be the last board meeting of whole time member Prashant Saran. Regarding REITs, Sebi plans to remove the restriction on the SPV (Special Purpose Vehicle) to invest in other SPVs holding the assets, which in turn would allow REITs to invest in a holding company owning stake in SPVs.