SEBI: Allows depository receipts for REITs, InvITs

The Securities and Exchange Board of India (SEBI) issued frameworks on 2 November 2026 allowing depository receipts against units of real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), according to PTI’s report published by ETGovernment. The receipts will be listed on India International Exchange and NSE International Exchange in India’s International Financial Services Centre (IFSC). PTI reported that the frameworks took effect immediately.

The rules allow trusts to issue new units or arrange the transfer of existing unitholders’ units to support depository receipts, PTI reported, citing SEBI’s two circulars. The route is intended to attract foreign capital, but holders of the receipts, including their beneficial owners, cannot be residents of India.

SEBI’s InvIT circular, numbered HO/17/11/19(7)2026-DDHS-RAC/I/24930/2026 and dated 2 November 2026, sets out the issuance process, approval requirements and responsibilities of intermediaries. It implements Regulation 14(5C) of the SEBI (Infrastructure Investment Trusts) Regulations, 2014, which permits depository receipts on InvIT units subject to SEBI’s prescribed conditions.

How the receipts will be issued

Under the InvIT circular, a depository receipt is a foreign currency-denominated instrument issued by a foreign depository against InvIT units held with a SEBI-registered domestic custodian. The receipt must be listed on a specified international exchange. The underlying asset remains the InvIT unit; the foreign depository issues the instrument representing it.

The circular confines this route to the IFSC in India and the two named exchanges. It requires listings to meet the highest applicable standards for foreign issuers on those exchanges. PTI reported the same permitted exchanges for REIT receipts.

For existing InvIT units, SEBI requires formal agreements between the investment manager, acting for the trust, and the foreign depository. The manager may also make arrangements with the Indian depository, domestic custodian and participating unitholders.

The InvIT circular places responsibility for the non-residency requirement on receipt holders and their beneficial owners, meaning the persons who ultimately own or control the holding. It also requires compliance with the InvIT regulations and sets eligibility conditions covering capital-market debarment, wilful-default status and fugitive-economic-offender status.

Those checks extend to specified parties associated with the trust and unitholders transferring units. SEBI also provides an exception from the specified eligibility restrictions for persons or entities whose earlier debarment period has expired by the offer-document filing date.

Approval depends on votes cast

According to PTI, fresh receipt issues by REITs and InvITs require prior unitholder approval, with at least 75 per cent of votes cast supporting the resolution. The threshold is based on participation in the vote, rather than all outstanding units.

SEBI’s InvIT circular makes two exceptions. Approval is not required where an initial domestic offer and listing accompanies a simultaneous receipt issue and international listing. Subsequent receipt offerings also do not need fresh approval if they remain within the overall limit already authorised by unitholders.

For the simultaneous-listing route, the circular requires approvals from both the recognised Indian stock exchange and the international exchange. Units can be issued or transferred for the receipts only after the domestic exchange has granted trading approval for the initial unit offer.

Where an InvIT receipt offering uses units transferred by existing holders, SEBI requires the trust to give all existing unitholders an opportunity to tender their units. PTI reported an equivalent requirement for REITs.

The InvIT circular defines a fresh receipt issue to include both first-time and subsequent offerings, whether backed by newly issued units or transfers of existing units. It excludes reissuance arising from two-way fungibility, the process through which receipts and underlying units can be converted in either direction.

Filing, pricing and public holdings

SEBI requires an InvIT’s investment manager to file the initial offer document through a merchant banker with the regulator and recognised stock exchanges. Under the circular, SEBI will endeavour to send any comments within seven working days of receiving the document. This is a stated processing aim, not an unconditional promise of clearance.

The recognised stock exchanges must consider SEBI’s comments and decide on in-principle approval within 15 working days of receiving the application and required documents. The final offer document must also be filed with SEBI and the exchanges for their records. PTI reported corresponding filing requirements for REIT managers.

For simultaneous domestic and international listings, the InvIT circular prohibits issuing or transferring the underlying units at a price below that applicable to the corresponding domestic initial offer, preferential allotment or institutional placement. PTI reported that the pricing principle applies to both frameworks, including units issued or transferred separately for receipt issuance.

The InvIT circular also requires compliance with minimum public unitholding at the time of issuance. Units held at the depository for receipt issuance count as non-public holdings for that calculation. Consequently, those units cannot be counted towards the trust’s required public holding. PTI reported the same treatment for REITs.

For privately placed InvITs, SEBI adds conditions tied to the regulations governing minimum underlying unit value and eligible foreign subscribers. The investment manager’s agreement with the foreign depository must require holders and beneficial owners to comply with the subscriber-eligibility condition.

Disclosure and voting responsibilities

Under the InvIT circular, the investment manager must appoint a merchant banker to oversee issuance compliance. The merchant banker’s compliance report must go before the investment manager’s board of directors.

SEBI also requires the manager’s agreement with the foreign depository to address applicable holding limits. For specified limits, a receipt holder’s domestic units and the units underlying receipts must be counted together, including beneficial ownership. For another specified limit, holdings of persons acting in concert must also be aggregated.

The circular requires public disclosures made by an InvIT on an international exchange to be filed with recognised domestic exchanges within 24 hours. Any voting rights attached to the underlying units must be exercised through the foreign depository, and only on instructions from the receipt holder. PTI reported both requirements for REITs as well.

PTI further reported that domestic custodians must record receipt issuances and cancellations and report those transactions to Indian depositories. A foreign depository cannot issue the receipts until the domestic custodian confirms that it has received the underlying units.