In a move to enhance transparency and streamline compliance for Real Estate Investment Trusts (REITs), the Securities and Exchange Board of India (SEBI) issued Circular on May 7, 2025. Addressed to all REITs, the Indian REITs Association, and recognized stock exchanges, the circular revises key chapters of the Master Circular for REITs—specifically Chapters 3 and 4—concerning disclosure in offer documents and continuous compliance requirements post-listing.
These changes aim to improve investor confidence, simplify regulatory expectations, and align practices with international standards as India’s REIT market continues to expand.
What’s New?
This update is grounded in the recommendations of a Working Group constituted under SEBI’s Hybrid Securities and Advisory Committee (HySAC). The group, in consultation with the Indian REITs Association, submitted a detailed report focused on improving ease of doing business for REITs and Infrastructure Investment Trusts (InvITs). Based on their inputs, SEBI has introduced significant changes affecting the disclosure of financials in offer documents and periodic compliance obligations.
Revisions to Financial Disclosures in Offer Documents
Chapter 3 of the Master Circular has been updated to specify clearer and more comprehensive financial disclosure requirements. One of the key modifications includes:
Mandatory Proforma Financial Statements: If a REIT acquires or divests material assets after the latest financial reporting period but before filing the offer document, it must now disclose certified proforma financials for at least the most recent full financial year and any interim (stub) period.
Reference to Public Disclosures: Financial disclosures may be made by incorporating links to previously published information under REIT regulations or relevant SEBI circulars. This eases compliance while maintaining access to verified data.
Asset-Level Financial Reporting: REITs must now include audited financial statements for assets being acquired for the past three years and any stub period, where available. In cases where general purpose financial statements aren’t available, combined or carved-out statements must be prepared in accordance with ICAI guidelines and audited by the seller’s auditor.
Newer REITs Given Flexibility: If a REIT has existed for less than three years, disclosures must still be made for all available financial years and any stub period, ensuring proportionate compliance.
Updates to Continuous Disclosure Requirements
Chapter 4 of the Master Circular, which addresses ongoing compliance, has also been aligned with the revised approach to financial transparency. This includes consistent requirements for updated disclosures in letters of offer and other periodic filings. The structure mirrors the changes made for offer documents, ensuring uniformity across the REIT’s lifecycle.
Why It Matters
These updates represent a well-calibrated effort by SEBI to enhance regulatory clarity without overburdening market participants. By incorporating stakeholder feedback and aligning disclosure norms with practical business scenarios—like acquisitions between financial reporting periods—SEBI ensures that investors receive timely and relevant financial information.
Moreover, the ability to reference existing disclosures and use carved-out financials when general ones are unavailable demonstrates regulatory pragmatism that supports both investor protection and business efficiency.
Final Thoughts
SEBI’s latest circular is a vital step forward in building a transparent, trustworthy, and investor-friendly REIT ecosystem in India. As the market grows in size and complexity, such reforms are crucial for maintaining investor confidence and facilitating smoother operations for REIT sponsors and managers.
