News

Published: November 27, 2023
Updated: November 27, 2023

SEBI Unlocks Opportunities for Smaller REITs, Postpones Delisting Rule Changes

In a recent development, the Securities and Exchange Board of India (SEBI) has paved the way for smaller and medium-sized Real Estate Investment Trusts (REITs). This move is part of a broader initiative by SEBI to foster growth in the market, with notable changes in norms for Social Stock Exchanges (SSEs) and certain Alternative Investment Funds (AIFs).

Empowering Smaller REITs:

SEBI has significantly reduced the entry barriers for smaller REITs. The previous requirement of a minimum asset value of ₹500 crore for listing has been slashed to ₹50 crore for small and medium REITs. Additionally, a framework will be established for existing private REITs to transition into public REITs, opening new avenues for real estate investment.

SSEs and Investor Accessibility:

The proposed reduction in the minimum issue size for SSEs from ₹1 crore to ₹50 lakh and the minimum ticket size for investors from ₹2 lakh to ₹10,000 is a notable step towards increasing accessibility. These changes aim to encourage broader participation in SSEs, aligning with SEBI's efforts to make the market more inclusive.

AIFs: Compliance Relief:

SEBI has eased the compliance burden on certain AIFs, particularly those facing mandatory dematerialization of units. Exemptions will now apply to cases where investee companies are already required to issue shares in demat form. This relief extends to funds at the end of their lifecycle or in the liquidation phase, streamlining regulatory processes.

Delisting Norms Under Scrutiny:

SEBI has deferred the proposal on easing delisting norms, emphasizing the need for a more comprehensive analysis of relevant data. The regulator, having floated a discussion paper in August, aims to ensure orderly exits for companies leaving public markets. However, the board deems the existing dataset too limited to draw significant conclusions, prompting a further examination of pertinent data.

Future of Settlements:

SEBI Chairperson Madhabi Puri Buch provided insights into the proposal for instantaneous settlements in equity markets. An option for trading with T+0 settlement is expected by the end of the current financial year, with the full-fledged instantaneous settlement to follow in the next financial year. Importantly, this settlement option will be introduced as a separate route, offering flexibility for investors.

SEBI's recent decisions reflect a commitment to fostering a dynamic and accessible market environment. By empowering smaller REITs, revising SSE norms, and providing compliance relief to AIFs, the regulator is taking strides towards a more inclusive and investor-friendly landscape. The careful reevaluation of delisting norms and the upcoming introduction of instantaneous settlements underscore SEBI's dedication to ensuring a robust and well- informed regulatory framework.