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Informist, Tuesday, Aug. 4, 2026

MUMBAI – The Securities and Exchange Board of India on Tuesday proposed extending the scope of the current regulatory framework for issuing depository receipts to units of real estate investment trusts (REITs) and listed infrastructure investment trusts (InvITs). In a consultation paper, SEBI proposed that an enabling provision be inserted in the REIT and InvIT regulations to allow for the issue of depository receipts against the units.

Under government notifications, depository receipts are foreign currency-denominated overseas listed or unlisted instruments issued by a foreign depository in a permissible jurisdiction, backed by Indian securities issued or transferred to that foreign depository. These receipts are deposited with a domestic custodian.

Although REITs and InvITs are set up as trusts under the Indian Trusts Act, 1882, they are regulated under SEBI regulations. REITs and InvITs are permitted to issue units to investors, and the unitholders are the beneficial owners holding a fractional interest in the underlying assets of the trusts.

SEBI's proposals in the consultation paper require REITs and listed InvITs to take prior approval of unitholders with at least 75% of votes cast in favour of the resolution. The market regulator also proposed that the manager of REITs and InvITs make the same disclosures on domestic stock exchanges as made on international exchanges where the depository receipts are listed.

SEBI specified it was not proposing depository receipts issuance against units of privately listed InvITs since they had a trading lot size of INR 2.5 million and can only be acquired by institutional investors and body corporates in the initial offer. These restrictions cannot be enforced on depository receipts issued by them in overseas jurisdictions.

SEBI also proposed a dilution in its depository receipts framework for companies with respect to REITs and publicly listed InvITs. Companies issuing depository receipts have to ensure that the equity shares underlying the depository receipts, along with other domestic equity shares held by foreign investors, do not exceed the limits on foreign holdings under the Foreign Exchange Management Act. SEBI said these limits do not apply to REITs and InvITs under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019.

The market regulator made other proposals regarding the issuance of depository receipts by REITs and InvITs. SEBI has asked public investors and market participants to send in their comments on the proposals to the market regulator by Aug. 25.  End

Reported by Rajesh Gajra

Edited by Saji George Titus

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