The Securities and Exchange Board of India (SEBI) has recently unveiled new norms for real-estate investment trusts (REITs) and Infrastructure Investment Trusts (InvITs). Per the new norms, all unitholders who, either collectively or individually, own up to 10% of all outstanding units of InvITs will be known as eligible unitholders.
They will have the power to appoint a non-independent director to the board of directors of the investment manager. The same conditions will apply to REITs as well, with immediate effect.
Here are a few other conditions laid down by SEBI to enhance small unitholder’s participations in the regulation and governance of these REITs and InVITs :
Both REITs and InVITs offer regular investors an affordable, liquid way to dabble with real estate. You can begin investing in both these instruments with the minimum amount ranging between Rs 10,000 and Rs 15,000. Currently, Indian markets have 5 registered REITs and 20 InVITs
REITs generate income via the rental income and property appreciation they receive from operating real estate properties. On the other hand, InVITs focus on long-term infrastructure development by investing in highways, roads, power plants and warehouses. Here, unitholders earn by means of dividends. Naturally, owing to where both REITs and InVITs invest in, REITs are far more liquid and easily tradable on the stock exchange. Former SEBI faculty Anil Upadhyaya notes that “while these regulations are welcome, the need to have more unitholder opinion on board is far greater when it comes to InVITs than REITs, since they demand a larger and more illiquid amount for investment purposes”
Download Money9 App for the latest updates on Personal Finance.