REITs to need insurance cover to safeguard investor interests
Real Estate Investment Trust (REITs) in India will require such bodies to take adequate insurance cover for their realty assets. This needs to be done to safeguard the investors’ interest. The new norms should bar them from promising any guaranteed returns.
The detailed norms about REITs which will be made public soon, will also contain strict provisions for any misleading claims. This will require the companies which will launch them to a strict 10-point code of conduct for fair business practices.
Besides, any change in the sponsor group of these Trusts, would need approval from a vast majority of unit-holders. The REITs can be listed on stock exchanges and their units can be traded like any other security. Failing that, they would need to be given an exit option from the new sponsor.
At the same time, regulator SEBI has decided to keep the disclosure requirements and overall regulatory compliance mechanism simpler for REITs. Registration fees would also be on lower side vis-à-vis other instruments to raise funds from the capital markets. SEBI wants this to be a success and wants to attract medium investors for them.
The new REIT regulations, which were cleared by SEBI’s board on August 10, would be notified soon after necessary fine-tuning. A senior official of SEBI disclosed these new developments and welcomed the investors to invest in this new instrument.
Source- The Hindu Business Line
