SEBI Board Clears the Way for Small and Medium REITs
The Securities and Exchange Board of India (SEBI) has made a series of decisions that will have a significant impact on the country’s securities market. SEBI has now greenlighted small and medium REITs, and the SSE, a social stock exchange. Additionally, SEBI will provide exemptions to certain types of Alternative Investment Funds that are currently mandated to dematerialize their units.
Provision for Small and Medium REITs
At present, only REITs with an asset valuation of at least ₹500 crore are eligible for listing in India. However, SEBI has relaxed regulations for small and medium REITs with asset valuations that are a minimum of ₹50 crore. The regulatory framework approved by SEBI’s board for small and medium REITs includes specific criteria regarding their structure, migration of existing structures, and the obligations of the investment manager, including required net worth, experience, and minimum unitholding requirements.
Eased Compliance for AIFs
SEBI has eased the compliance burden for certain alternative investment funds (AIFs) that were previously required to dematerialize their units. The regulator has now proposed exemptions in cases where an investee company is already required to issue shares in demat form. SEBI has also extended the exemption to funds that are in their liquidation phase or are at the end of their lifecycle.
Additional Changes
SEBI has reduced the minimum issue size from ₹1 crore to ₹50 lakh for SSEs and lowered the minimum application amount from ₹2 lakh to ₹10,000. The time has also been extended regarding the appointment of a custodian to all AIFs. This mandate will now apply to fresh AIF investments with effect from September 2024.
Postponed Delisting Regulations
However, SEBI has deferred a proposal on easing delisting norms, citing the need for additional data to formulate new rules. SEBI Chairperson Madhabi Puri Buch said that the regulator intends to examine further data before announcing any significant changes. The board had floated a discussion paper proposing more relaxed delisting standards in August. SEBI emphasized the importance of ensuring that exits for companies that choose to leave public markets remain orderly.
Update on Instantaneous Settlements
Buch also updated on the proposal for instantaneous settlements in equity markets and announced that an option for trading with T+0 settlement would be introduced by the end of the financial year. Additionally, the instantaneous settlement would be introduced during the next financial year, and it would be optional for investors.
In conclusion, SEBI’s recent decisions on the securities market are poised to make a considerable impact in India. The regulator’s decision to allow small and medium REITs to list has opened up new opportunities for investors, while eased compliance regulations for some alternative investment funds will potentially help minimize compliance burdens. Additionally, SEBI’s decision to defer delisting regulations emphasizes the importance of taking a data-driven approach to regulatory changes. Finally, SEBI’s ongoing efforts to enable instantaneous settlements in equity markets demonstrate the regulator’s commitment to improving liquidity and expanding access for investors.
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