Sebi OKs Fractional Ownership Framework for Realty Assets




New mechanism to provide registration for index providers also approved

Mumbai: The board of the Securities and Exchange Board of India on Saturday approved a proposal to introduce a framework for fractional ownership of real estate assets. The regulator however, deferred its plan to make changes to delisting rules.

Sebi had proposed to allow companies to delist by coming out with a fixed price for the repurchase of shares instead of the existing reverse book building mechanism where they decide on the price based on the sell or ders subraitted by shareholders.

“It (delisting proposal) was discussed in the board meeting Our commitment to using data for policy making is such a strong commitment that the board directed us that since the number of delis ting applications received over the last five years is small… the data set is very limited to draw a very significant conclusion, “Sebi chairperson Madhabi Puri Buch saidsfter the board meeting. “The board guided us to go back and do further examination of certain data and do further consultation with stakeholders so that we have a better sense. That is the person that it was not done this time.”

The Sebi board approved set tinguporsmaltand mediuni realestate investment trusts (RE ITs), with an asset vaine of at least Rs 50 crore as compared to Rs 500 crore for existing REITs

Sebi said small and medium REITs would have the ability to create separate schemes for owning real estate assets through special purpose vehicles constituted as companies. It said the existing structures could migra te, provided they meet certain criteria such as net worth, mini- mum unit holding requirement. minimum subscription, distri bution and valuation rules

The avenue would facilitate in istment in primarily preleased real estate which earn the investors a rental yield, as well as participate in potential rise in the value of such properties. The returns are distributed uted to the investors af for management fees and other charges This growth-oriented initiative is poised to facilitate fractional ownership of real estate in a more organised and structurnost manner said Sumit Agrawal partner, Regstreet Law Advisors.