The Hindu : Business : SEBI proposes norms to regulate real estate trusts

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Saturday, Dec 29, 2007
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SEBI proposes norms to regulate real estate trusts

Investment schemes will not promise assured returns

MUMBAI: The Securities and Exchange Board of India (SEBI) on Friday proposed guidelines to regulate fund raising activities by Real Estate Investment Trusts (REITs).

According to the draft regulations, REITs and real investment management companies will require mandatory registration with SEBI. The regulator has invited public comments on the draft by January 10.

Under the proposed guidelines, REITs will not be allowed to launch any investment scheme without obtaining a rating from a credit rating agency and getting the scheme approved by an appraising agency.

The guidelines further stipulate that the investment schemes will not promise guaranteed or assured returns, unless the offer document so specifies. Such returns should also be “assessed by the appraising agency and expressed in monetary terms.”

Registration

As regards the registration, the guidelines states that companies with a net worth of Rs. 5 crore will be eligible for registration as REITs. Those with a net worth of Rs. 3 crore will be required to increase its net worth to Rs. 5 crore within three years from the date of registration.

Also, trustees, directors and key personnel of real estate investment trust will have to conform to the criteria laid down in the SEBI (Criteria for Fit and Proper Person) Regulations. — PTI

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