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TMI BlogREGISTRATION OF SMALL AND MEDIUM REITsX X X X Extracts X X X X X X X X Extracts X X X X ..... REGISTRATION OF SMALL AND MEDIUM REITs - By: - Mr. M. GOVINDARAJAN - Corporate Laws / IBC / SEBI - Dated:- 10-12-2024 - Real Estate Investment Trust (REIT) registered under REIT Regulations facilitate pooled investment in real estate assets or properties and is required to be set up as a trust registered with and regulated by SEBI. Also, the minimum value of REIT assets presently specified under REIT Regulations is Rupees 500 crores. SEBI had notified REIT Regulations on September 26, 2014 . As on date, there are five REITs registered with SEBI. In view of the increasing value of investments and investors with structures facilitating investments in real estate assets and in order to bring about, inter-alia, regulatory oversight, adequate d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosures, investor redressal mechanism, SEBI issued a consultation paper titled Regulatory Framework for Micro Small and Medium REITs (MSM REITs) on May 12, 2023 proposing to regulate entities offering fractional ownership of real estate assets as MSM REITs under REIT Regulations, 2014. After getting the comments from the public the Board inserted a new chapter VI B in SEBI (Real Estate Investment Trusts) Regulations, 2014 vide Notification No. SEBI/LAD/NRO/GN/2024/166, dated 08.03.2024 which came into effect from 08.03.2024. Investment Manager The investment Manager plays a key role in the activities of Small and Medium REITs ( SM REIT for short) Investment Manager is a company incorporated in India, which sets up SM REIT and manages ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets and investments of the SM REIT and undertakes operational activities of the SM REIT. Investment Manager is to file application in Form A to SEBI for registration of SM REIT. The Investment Manager shall have a net worth of not less than Rs.20 crore. Not less than Rs.10 crores of net worth of the investment manager is in the form of positive liquid net worth. The investment manager has at least 2 years experience in the real estate industry or real estate fund management. It shall employ at least 2 key managerial personnel, each of whom have not less than 5 years experience in the real estate industry or real estate fund management. Not less than half of the directors of the investment manager are independent and are not directors of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manager or investment manager of another REIT or SM REIT, as the case may be. Trustee T he investment manager has to enter into an investment management agreement with the trustee. The Investment Manager and the trustee shall be different persons. The instrument of trust is in the form of a deed duly registered in India under the provisions of the Registration Act, 1908. The trust deed has its main objective as undertaking activity of SM REIT through one or more schemes in accordance with these regulations and includes responsibilities of the trustee in accordance with these regulations. Ineligibility In the following circumstances the application for registration of SM REIT is liable for rejection- If any previous application for grant of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate by the applicant or the parties to the SM REIT or their directors, for registration as a REIT or an SM REIT, has been rejected by the Board. Any disciplinary action has been taken by the Board or any other regulatory authority against the SM REIT or the parties to the SM REIT or their promoters or directors under any Act or the regulations or circulars issued thereunder. Form A The application has eight parts- General Information Details of trust Details of trustee Details of investment manager Details of business plan and investment strategy Details of regulatory action in the past, if any Other information Declaration General Information The following information shall be furnished under this heading- Name, address, telephone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number(s), fax number(s), e-mail address of the SM REIT; Name, direct line number, mobile number and e-mail of the contact person(s); Whether the trust / investment manager or their associates or trustee is/ are registered with the Board, the Reserve Bank of India or any other regulatory authority in any capacity along with the details of its registration? Details of infrastructure for conducting activities as a SM REIT. Details of trust In this heading it shall be indicated whether the trust deed is registered under Registration Act. The activities of the trust shall be mentioned. The main objective of the trust and the role and responsibilities of the trustee are to mentioned. Details of trustee The trustee shall be a Debenture Trustee r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered under the provisions of Depository regulations. The details of the registration as Debenture Trustee, the activities of the trustee, the personal information of the trustee, details of the infrastructure and employees of the trustee, the documents relating to the proof for identity of trustee and its directors, the details of registration of trustee with any other regulatory authority are to be furnished. The copy of the executed registered deed shall also be enclosed with the application. Details of investment Manager The following details of investment manager shall be furnished under this head in the application form- Name, address of the registered office address for correspondence, telephone number(s), fax number(s), of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestment Manager; Name, direct line number, mobile number and e-mail of the contact person(s); The details of the incorporation, date and place, legal status of the investment manager; Details of the activities of the investment manager including its past experiences in real estate industry and their professional qualifications; The list of directors and their identities and address details; Shareholding and profiles of the Directors; Net worth certificate of investment manager duly certified by a Chartered Accountant not more than 6 months old. Details of net worth held in liquid assets. Details of business plan and investment strategy Investment objective and investment style; Details of proposed scheme offerings; Brief details of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets proposed to be held under the scheme of the SM REIT; Fee structure; Migration plan of any existing persons, entities or structures to the structure of the scheme of the SM REIT, including timelines, milestones and any other relevant details; Details of current holdings and investments in real estate; Details of past activities in real estate. Details of regulatory action taken in the past In the application it is to be stated as to whether the SM REIT or the parties to SM REIT or the Directors are involved in the litigation connected with the stock market and punishment has been imposed on them for the violations of securities law. Whether any disciplinary action has been taken against such person by the Board or any other regulatory b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ody under any of the law time being in force. It is also to be stated whether the registration certificate has been refused or suspended the registration certificate in respect of the above said persons. Other information Declaration is to be given that the investment manager shall comply with the loc in conditions specified under these regulations. Declaration is also to be given as to the parties to SM REIT shall be fit and proper persons as applicable to intermediary persons of SEBI. Declaration The applicant shall give declaration as to the information given in the application, including the attachments are true and correct. If any change to the particulars given in the application, the same shall be intimated to the Board immediately. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Declaration is to be given as to the compliance of the provisions of these regulations, guidelines or circulars, operational instructions and directions as may be issued by the Board. Fees The applicant shall pay Rs.1 lakh which is non-refundable, as fee along with the application. The applicant has to further pay a sum of Rs. 10 lakhs, which is also non-refundable, within 15 days from the date of communication from the Board. Further information On receipt of application the Board may scrutinize the application and if requires the Board may direct the applicant to supply further information/documents or clarification for the purpose of registration. The Board, if it so desires, may require the applicant or any authorized representative to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appear before the Board. Grant of certificate The Board, on being satisfied that the trust fulfils the requirements specified in this chapter, shall send an intimation to the trust and on receipt of the payment of registration fees, grant the certificate of registration in Form B. Conditions The certificate granted to SM REIT shall be subject to such conditions as the Board may deem appropriate, including, It shall abide by the provisions of the Act and these regulations. It shall adhere to the migration plan, if applicable, submitted by it to the Board at the time of application for certificate of registration. It shall forthwith inform the Board in writing, if any information or particulars previously submitted to the Board are found to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e false or misleading in any material particular or if there is any material change in the information already submitted. It shall satisfy the conditions specified in this chapter at all times. It shall comply, at all times, with the Code of conduct as specified in the Schedule VI, wherever applicable. Refusal of registration If the Board is of the opinion that a certificate should not be granted to the trust, it may reject the application after giving the applicant a reasonable opportunity of being heard. The Board shall communicate the applicant about the refusal of registration within 30 days from the date of its order. - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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