SEBI Updates REIT Rules for Foreign Receipts, Voting, and Exit Options
SEBI updated REIT rules to allow foreign depository receipts, require 75% non-related party voting approval, and grant exit options during sponsor exits.
- Document
- Master circulars & regulations
- Dated
- 15 Oct 2026
- Effective
- Date of publication in the Official Gazette
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- REITs can now issue depository receipts to raise funds from foreign investors.
- Major REIT decisions now require 75% approval of votes cast, excluding related parties.
- Outgoing sponsors in multi-sponsor REITs must offer an exit option to dissenting unitholders.
In short
The Securities and Exchange Board of India (SEBI, the market regulator) amended the REIT regulations to protect unit holders and make foreign capital raising easier. The new rule ensures that major decisions require 75% approval from independent unitholders (investors holding REIT shares) while excluding related party votes. It also provides a buyout route for investors who disagree when a sponsor exits.
What has changed
How it worked before
Before this amendment, SEBI regulations did not explicitly allow depository receipts (foreign investment certificates) on REIT units. Additionally, voting calculations did not strictly exclude related party votes in this manner, and dissenting unitholders lacked a guaranteed exit option when a sponsor in a multi-sponsor REIT stepped down.
What has changed
SEBI added Regulation 14(12A) to permit REITs to issue depository receipts overseas. It updated Regulation 22 to mandate that specified resolutions achieve at least 75% of votes cast, strictly excluding votes from related parties. It also added Regulation 22(8)(b)(iv), requiring multi-sponsor REITs to offer an exit option to unitholders who vote against a sponsor's departure.
Who this affects
This affects real estate investment trusts (REITs), REIT managers, sponsors, and investors who hold units in an Indian REIT.
An example
Suppose an investor owns units in a multi-sponsor REIT that plans to let one sponsor exit. Under the new rules, if the investor votes against this change, the exiting sponsor and REIT must offer them an exit option to sell back their units. Furthermore, when voting on this or other key decisions, the REIT cannot count votes from related parties toward the required 75% majority.
What you should do
REIT managers and sponsors must update their voting procedures to exclude related party votes and ensure major decisions meet the 75% threshold. They must also set up exit mechanisms for dissenting investors when a sponsor exits. Individual unitholders do not need to take immediate action, but should note their improved voting rights for future REIT shareholder meetings.
If you do nothing
If a REIT manager fails to exclude related party votes, SEBI may invalidate the voting resolution. If an outgoing sponsor fails to provide an exit option to dissenting unitholders, SEBI can issue regulatory penalties or restrict the sponsor from completing the transaction.
The terms explained
- REIT
- An investment pool that owns and operates income-generating real estate assets.
- Depository Receipts
- Certificates issued by foreign banks representing shares or units in an Indian entity.
- Unitholders
- Individual or institutional investors who own units or shares in a REIT.
- Sponsor
- The primary promoter or entity that establishes a REIT.
The original document
| Issued by | SEBI |
|---|---|
| Document | Master circulars & regulations |
| Full title | Securities and Exchange Board of India (Real Estate Investment Trusts) (Second Amendment) Regulations, 2026 |
| Issued on | 15 October 2026 |
| Effective | Date of publication in the Official Gazette |
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