Market Regulator Permits Alternative Investment Trusts To Issue Depository Receipts Abroad

The Securities and Exchange Board of India (Sebi) has established regulatory frameworks enabling real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) to issue foreign currency denominated depository receipts. This mechanism permits these trusts to tap into overseas capital markets through international financial exchanges situated in GIFT City. To proceed with any issuance of depository receipts, the trusts must secure unitholder approval backed by a supporting majority. Capital raising in global markets allows domestic investment vehicles to diversify their funding sources beyond traditional domestic channels by leveraging foreign currency instruments.

Under the updated framework, participating trusts and existing unitholders are subject to specific restrictions and conditions designed to maintain market integrity. Previously, such cross-border depository receipt pathways were less accessible or non-existent for these alternative asset classes, shifting the operational landscape toward internationalization. Finance professionals and compliance teams advising REITs or InvITs must review the detailed regulatory circulars for specific eligibility thresholds, filing procedures, and foreign exchange compliance norms.

Stakeholders should track forthcoming operational guidelines from international exchanges at GIFT City and prepare unitholder resolutions for upcoming capital-raising initiatives. Bottom line: Assess cross-border funding options carefully to optimize capital costs while adhering strictly to the newly minted regulatory conditions.