The Securities and Exchange Board of India (SEBI) on May 12, 2023, issued a consultation paper on Regulatory Framework for Micro, Small & Medium REITs (MSM REITs).
The objective of this consultation paper is to seek comments/views/ suggestions from the public on the proposals for regulating platforms offering fractional ownership of real estate assets. Such fractional ownership of real estate assets is proposed to be brought as MSM REITs under SEBI (Real Estate Investment Trusts) Regulations, 2014.
This consultation paper attempts to bring forth the salient features of such FOPs and proposes extending the framework of SEBI (Real Estate Investment Trust) Regulations, 2014 (REIT Regulations), with due modifications as required, in order to bring these FOPs under the regulatory ambit / regulatory perimeter of SEBI. This would not only help develop the real estate market but also provide investor protection measures and lead to an orderly development of this sector and the market.
Registration of FOPs under SEBI REIT Regulations, as outlined, will be beneficial to the market and market participants as-
•The standard KYC requirements will be applicable while registering clients.
•The Net worth and deposit requirements prescribed for Sponsor and Manager will ensure that these platforms have sound and stable financial health.
•The applicability of the code of conduct mandated for Managers will ensure fairness in their dealings with clients.
•They will be subjected to regulatory inspection and oversight, providing more confidence to investors and hence, will have the potential to attract more investors.
•Regulated entities in the financial services sector would be able to undertake the distribution of MSM REIT
The comments on the Consultation paper by May 27, 2023.
