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Informist, Wednesday, Dec. 18, 2024

--SEBI allows REITs, InvITs to invest in select unlisted equity shrs of cos 

--SEBI allows REITs, InvITs to invest in select liquid mutual fund schemes 

--SEBI OKs norms for ease of doing business for employees of AMCs 

MUMBAI – The Securities and Exchange Board of India approved certain measures aimed at ease-of-doing business for Real Estate Investment Trusts and Infrastructure Investment Trusts. In a board meeting held Wednesday, it allowed REITs and InvITs to invest in unlisted equity shares of such companies which provide their assets with incidental services such as property management, property maintenance, and others.

In another measure aimed at protecting investments by REITs and InvITs, the board permitted their investments in liquid mutual funds schemes where the credit risk value is at least 12, with schemes falling under the Class A-I of the potential risk class matrix.

In the potential risk class matrix framework, class I, II, and III denote interest rate risks, with the risk rising as the numbers increase. Further, class A, B, and C denote credit risks, with the subsequent alphabet denoting increasing risks. Therefore, 'Class A-I' would have the least credit and interest rate risk. 

In order to benefit the unit-holders, the board, in a measure to strengthen the role, also approved the expansion of the roles and responsibilities of the trustees.

On the ease-of-doing business for small and medium REITs, the board approved a proposal to standardise the disclosures in the 'scheme offer document'. Consequently, it bifurcated the 'scheme offer document' into 'key information of the trust' and 'key information of the scheme'.

It also approved the proposal regarding guidelines for public issue of units by a scheme of small and medium REITs, including subscription period and price band. The board aligned certain provisions concerning investment conditions and borrowings by small and medium REITs with REITs. 

On the environmental, social and governance framework front, the board took certain measures to improve the ease-of-doing business for ESG rating providers. The SEBI had, on Oct. 31, issued a consultation paper for the same, proposing those ESG rating providers who follow a subscriber-pay model to share their report with the subscribers and the rated issuer at the same time. The board has now approved the proposal. 

The consultation paper issued in October had also proposed that the rating provider should grant an opportunity of representation to the rated issuer before sharing the report. In the meeting held Wednesday, the board approved the process of dealing with appeal and representation by the rated issuer.

In the consultation paper, the SEBI had said that in the case of a different viewpoint by the rated issuer on the data or assumptions stated in the rating report, the rating provider, after taking into account the said viewpoint, may either revise the rating report in the addendum report or issue an addendum to the report with its remarks, for circulation to all subscribers as considered appropriate. 

The Board also approved an activity-based regulatory framework for ESG rating providers to undertake activities which fall under the purview of other financial sector regulators. It also asked ESG rating providers to separate non-regulated activities into a separate entity. Such hived-off entities are allowed to share resources for efficient functioning, albeit without any legal liability by the regulated entity. 

Furthering its efforts to ease-of-doing business to employees of Asset Management Companies, the SEBI approved certain measures aimed at aligning the interests of designated employees of the AMCs with the interests of its unit-holders, by reducing minimum investment amount, reduction of frequency of disclosures, lower lock-in period for employees who have resigned.

The board also mandated disclosure of results of stress tests of all mutual funds, apart from empowering the Nomination and Remuneration Committee to verify compliance by designated employees, and relaxing requirements for employees managing liquid funds. The board also relaxed redemption norms.  End

Reported by Sourabh Kumar

Edited by Akul Nishant Akhoury

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