Market regulator Securities and Exchange Board of India (SEBI) has allowed Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) to issue depository receipts (DRs) backed by their units and list them on GIFT City exchanges, opening another route to attract foreign investment. DRs are foreign currency-denominated instruments issued by a foreign depository against underlying units deposited with a domestic custodian.
Under two circulars issued on Monday, SEBI has specified the framework for such issuances. The permitted exchanges are India International Exchange (India INX) and NSE International Exchange, both located in the International Financial Services Centre (IFSC) at GIFT City.
SEBI has specified that any fresh issue of DRs will require prior approval from unitholders, with at least 75 percent of the total votes cast in favour of the resolution.
However, this approval will not be required when a REIT or InvIT undertakes an initial offer of units and simultaneously issues DRs for listing on an international exchange. All subsequent DR offerings within the overall limit already approved by unitholders will not require fresh approval.
If existing unitholders transfer their units for the purpose of issuing and listing DRs, the REIT or InvIT must provide an opportunity to all existing unitholders to tender and participate in the offering.