SEBI Depository Receipts on REIT, InvIT Units: IFSC Listing Framework Takes Effect
SEBI has put in place the framework for issuing depository receipts on REIT and InvIT units, through two circulars dated 2 November 2026 that take effect immediately. The REIT circular, HO/17/11/19(7)2026-DDHS-RAC/I/24932/2026, and its InvIT counterpart, Circular HO/17/11/19(7)2026-DDHS-RAC/I/24930/2026, let a foreign depository issue foreign-currency receipts against units held with a domestic custodian, with listing allowed only on the two international exchanges in India's International Financial Services Centre (IFSC).
The enabling provisions already sit in the trust regulations: Regulation 14(12A) of the SEBI (Real Estate Investment Trusts) Regulations, 2014 and Regulation 14(5C) of the SEBI (Infrastructure Investment Trusts) Regulations, 2014 allow depository receipts (DRs) on units in the manner the Board specifies. The circulars supply that manner. REIT and InvIT units were already "permissible securities" under the Depository Receipts Scheme, 2014, and the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 already allowed non-residents to invest in DRs on them. What was missing was the SEBI-side procedure, which SEBI first floated in a consultation paper in August 2026, as Business Standard reported on 4 August 2026.
Where REIT and InvIT depository receipts can list
The only permissible jurisdiction for now is the IFSC in India, and the receipts must be listed on the India International Exchange or the NSE International Exchange. Listing standards there must be at least the highest standards that apply to foreign issuers on those exchanges. A DR is defined as a foreign-currency instrument, listed on an international exchange, issued by a foreign depository against units deposited with a domestic custodian registered with SEBI. The foreign depository itself must not be barred from acquiring units, must be regulated in the permissible jurisdiction and must have legal capacity to issue DRs there.
Holders of DRs, including their beneficial owners, must not be persons resident in India. Beneficial owner takes its meaning from the Prevention of Money-laundering Act, 2002, and the circulars place the burden of complying with this condition on the DR holder, not on the trust.
Who is barred from issuing DRs on units
The trust must be in compliance with its own regulations. A DR issue or transfer is not allowed if the trust, any of its parties, their directors, promoters or partners, or any unitholder transferring units for the purpose, is debarred from the securities market, is a wilful defaulter or is a fugitive economic offender. A debarment that has already run its course by the date of filing does not block the issue.
Two routes are recognised. Under a fresh issue, the trust issues new units that the custodian holds against the receipts. Under a "transfer by existing unitholders", current holders deposit existing units with the domestic custodian under agreements among the manager (or investment manager), the foreign depository and others. Where the transfer route is used, the trust must give every existing unitholder an opportunity to tender units for participation in the DR listing. The circulars do not prescribe the tender mechanics or allocation method.
Filing, SEBI comments and the 75% unitholder vote
For any fresh DR issue, the manager files the initial offer document with SEBI and the recognised stock exchanges through a merchant banker. SEBI will endeavour to send comments within 7 working days of receipt. The exchange then decides on in-principle approval within 15 working days of receiving the application and documents, after considering SEBI's comments. The final offer document is filed with the exchange and SEBI for record.
A trust doing its first offer of units in India alongside a DR listing needs approvals from both the Indian exchange and the international exchange, and the DRs can be issued or transferred only after the domestic units get trading approval.
Every other fresh issue of DRs needs prior unitholder approval with votes in favour of at least 75% of the total votes cast. The simultaneous-listing case does not need this vote. Once unitholders approve a total DR limit by resolution, later DR offerings in a permissible jurisdiction within that limit need no fresh approval. Reissue of DRs under two-way fungibility, where receipts cancelled earlier are issued again, is not treated as a fresh issue at all.
Pricing floor, voting and the 24-hour disclosure rule
When units are listed in India through an initial offer, preferential issue or institutional placement and DRs are listed at the same time, the DR price cannot be lower than the price in that domestic offer. In other cases, including the transfer route, the price cannot be lower than the price that would apply to the corresponding mode of issue to domestic investors. The floor keeps the overseas route from being used to place units at a discount to Indian investors.
Voting rights on the underlying units are exercised by the DR holder through the foreign depository, and only on that holder's instructions. The agreement among the DR holder, the trust and the depository has to say so. Any public disclosure the trust makes on the international exchange under IFSC requirements must also be filed with the Indian stock exchange within 24 hours.
Minimum public unitholding and holding limits
The manager must ensure compliance with minimum public unitholding at the time DRs are issued. For that calculation, units held at the depository for issuing DRs are treated as non-public unitholding. A trust close to the public float threshold therefore has less room to use the DR route than its total unit base suggests.
The agreement with the foreign depository must also make DR holders comply with the holding limits in the trust regulations. For aggregation, units a DR holder and its beneficial owners hold in India are added to the units underlying their DRs, and for one of the limits, so are units held by persons acting in concert with them. The regulations cited differ between the two vehicles, as the comparison below shows.
The REIT and InvIT circulars follow the same structure; these are the points where they differ.
| Point | REIT circular | InvIT circular |
|---|---|---|
| Enabling regulation | Regulation 14(12A), REIT Regulations | Regulation 14(5C), InvIT Regulations |
| Holding limits DR holders must respect | Regulations 14(2)(bb) and 22(6A) | Regulation 14(2)(da) or 14(4)(ca), and Regulation 22(5C) |
| Extra conditions by category | None | Privately placed InvITs: each DR backed by units of the value in Regulation 14(2)(c); fresh DRs only for investors under Regulation 14(2)(b) |
| Manager named in the circular | Manager of the REIT | Investment Manager of the InvIT |
| Industry body asked to publish the circular | Indian REITs Association | Bharat InvITs Association |
Privately placed InvITs come into the framework
The August 2026 consultation, as reported, proposed DRs only for REITs and publicly listed InvITs and left privately listed InvITs out. The final InvIT circular instead carries specific conditions for privately placed InvITs. Each DR on such an InvIT must be backed by at least the number of units that carry the value specified in Regulation 14(2)(c) of the InvIT Regulations, measured on the date the initial offer document is filed with SEBI. Any fresh DR issue on a privately placed InvIT can be subscribed only by the foreign investors specified in Regulation 14(2)(b), and the depository agreement must oblige DR holders to ensure this. In effect the minimum ticket and investor-class limits that govern private InvITs in India travel with the receipts.
Custodian checks and conversion headroom
The domestic custodian keeps records of every DR issue and cancellation and reports them to the Indian depositories. The foreign depository cannot issue any DR until the custodian confirms that the underlying units have been received. The depositories, coordinating with each other and the custodian, must publish the number of units against which DRs are outstanding and the limit up to which units can still be converted into DRs. The reissue mechanism follows paragraphs 1 to 5 of Annexure 6 to SEBI's Master Circular for Stock Exchanges and Clearing Corporations dated 30 December 2024, read with "Listed Company" replaced by the trust's manager and "Permissible Securities" by the trust's units.
The manager must appoint a merchant banker to oversee compliance with the DR provisions, and the banker reports to the manager's board. DRs can be issued only with units as the underlying, and the manager remains answerable for compliance with FEMA, the PMLA and RBI and government guidelines on the issue.
For managers, sponsors and their auditors, the first practical steps are a unitholder resolution fixing the total DR limit, a check of public unitholding after excluding units that would sit with the custodian, and holding-limit covenants in the foreign depository agreement. Terms the circulars do not define take their meaning from the DR Scheme, the Securities Contracts (Regulation) Act, the SEBI Act, the Depositories Act, the Companies Act, the RBI Act, FEMA and the PMLA, and SEBI has kept the power to issue clarifications on a request from an issuer.
Official source: View the official source document
