ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has laid down conditions for the launching of the Real Estate Investment Trusts (REITs) schemes by the public limited companies licensed to undertake REIT Management Services.
The SECP has notified strict monitoring of the REIT projects through the new Real Estate Investment Trust Regulations, 2022 issued on Saturday to protect the investment of the general public.
The RMC (real estate management company) is licensed by the SECP to act as a REIT Management Company under the Non-Banking Finance Companies (Establishment and Regulation) Rules 2003 to launch REIT Schemes and carry out REIT Management Services in terms of the Real Estate Investment Trust Regulations 2022.
Under the SECP’s S.R.O. 2067(I)/2022, the “RMC” (duly incorporated public limited company which has been licensed by the Commission to undertake REIT Management Services) would have to comply with the specified conditions for the launch of a REIT Scheme.
An RMC intending to undertake REIT Management Services shall have paid-up capital of not less than Rs50 million prior to applying for a license and shall submit an auditor’s certificate or the latest audited financial statements not older than eight months evidencing paid-up capital of at least Rs50 million. Provided that RMC shall maintain subject paid-up capital at all times
Firstly, the REIT project shall be within the territorial limits of Pakistan. Secondly, the RMC shall appoint a Trustee for the REIT Scheme as per the provisions of these Regulations. The RMC shall appoint Shariah Advisor, in case of a Shariah-compliant REIT Scheme and shall obtain a Shariah compliance certificate as per the requirements of Companies Act, 2017 and execute a Trust Deed as per standard format provided in Schedule-I of these Regulations and shall obtain consent of Trustee. The new regulations revealed that an RMC can launch any REIT Scheme or as a combination of REIT Schemes. Provided that where the REIT Scheme involves a Public Private Partnership, any difference or inconsistency between the provisions of Concession Agreement and these Regulations, the RMC shall obtain relaxation and/or exemption.
Under the new regulations, an RMC shall hold or arrange through Strategic Investor(s), a minimum 25 per cent Units of the initial size of the REIT Fund (equity only), till revocation of the fund or listing of REIT Scheme, whichever is earlier and the same shall be kept in an account marked as blocked and shall not be sold, transferred or encumbered.
In case, there is more than one Strategic Investor, each one of them shall hold not less than five percent (5%) units of the REIT Scheme. However, the Strategic Investor and/or the RMC may, transfer/sell their holding of the REIT Scheme to another Strategic Investor(s) with the approval of the Commission.
The expenses to be incurred in connection with the establishment and registration of the REIT Scheme as well as the offer for sale, allotment and issuance of Units including commission payable to underwriters, if not included in the private or public offer, shall be borne by an RMC, and shall be reimbursed to the RMC out of REIT Assets after annual audit of the REIT Scheme in equal installments paid annually over period of five years or life of a REIT Scheme, whichever is shorter, and the same shall be stated in the Information Memorandum and the Offering Document/ Prospectus (as applicable), the SECP added.
Copyright Business Recorder, 2022