SEBI to ease norms for REITs, portfolio managers
The Securities and Exchange Board of India (SEBI) plans to relax norms for portfolio managers to enable more offshore fund managers to relocate to India.
The regulator is also looking to change the norms for Real Estate Investment Trusts (REITs) to attract more real estate companies in the sector.
The board of SEBI met in Mumbai and decided to release consultation papers on regulations for portfolio managers and REITs so that the current norms could be amended based on public feedback.
As part of the consultation paper, SEBI would look at simplifying the procedure for a SEBI-registered portfolio manager to function as an ‘Eligible Fund Manager’. An ‘Eligible Fund Manager’ refers to a person located in India and managing an overseas fund.
Tax issues
Earlier, there have been issues related to the manner in which such entities would be taxed. In the Union Budget 2015-16, the Income Tax Act, 1961 was amended by inserting Section 9A – popularly known as ‘Safe Harbour Norms.â€
The clause laid down that such fund management activities would not constitute as business in India subject to certain criteria, including the Eligible Fund Manager getting registered with SEBI.
The capital market regulator intends to review the procedure for registration of overseas fund managers who want to relocate to India and also there obligations and responsibilities.
Such fund managers would not be required to comply with certain provisions related to audit of overseas fund, minimum investment requirement of Rs.25 lakh and reporting requirements with respect to the overseas fund.
Special Purpose Vehicles
For REITs, the regulator is of the view that restriction on special purpose vehicles (SPVs) on investing in other SPVs should be removed and REITs should be allowed to invest up to 20 per cent in under-construction assets.
The regulator will also review the norms related to the number of sponsors in each REITs and align the minimum public holding requirement with SCRR – (Securities Contract (Regulation) Rules. SEBI will also clarify on the roles and responsibilities of trustee and its associates of REITs.