Strategic Management and Corporate Finance · Real Estate Investment Trusts

SEBI (REITs) Regulations, 2014: Registration and Eligibility

Updated 11 October 2026

Under the SEBI (REITs) Regulations, 2014, a trust cannot act as a REIT unless SEBI registers it. The trust applies in the prescribed form. It must meet the eligibility tests for itself and for its sponsor, manager and trustee. To solve a question, test each party against its own criteria and conclude.

Understand SEBI (REITs) Regulations, 2014: Registration and Eligibility

A REIT (Real Estate Investment Trust) pools money from investors and invests it in income-producing real estate. Investors hold units. The rent and other income is passed on to them. SEBI regulates REITs so that small investors are protected.

A REIT is set up as a trust, not a company. Three parties run it: the sponsor (who sets it up and puts in the assets), the manager (who runs the investments day to day) and the trustee (who holds the assets for unitholders and oversees the manager). The law keeps these roles apart so that no one party controls everything.

Regulation 3 says nobody can act as a REIT unless it holds a SEBI registration certificate. The applicant files an application in the prescribed form (Form A) with the fee. SEBI grants registration only if the applicant satisfies the eligibility conditions in Regulation 4.

The eligibility conditions work at two levels. At the REIT level, the trust must be registered under the Registration Act, 1908, and its trust deed must have REIT activity as its main object. The value of its assets must also meet the minimum set by the Regulations. That minimum has been ₹500 crore, but check the figure in the latest consolidated text. At the party level, each of the sponsor, manager and trustee must meet its own tests. These cover net worth, experience, independence and being a fit and proper person. Sponsors also face a separate unit-holding and lock-in requirement after the issue.

In the exam, the question gives you facts such as net worth, years of experience, or who owns the trustee. Your job is to match each fact to the right test and reach a conclusion. Thresholds have been amended over time, so learn them from the latest consolidated Regulations.

Key rules to remember

Registration rule: No REIT activity without SEBI registration (Reg 3); apply in Form A with fee; Registration is a precondition. Eligibility is then tested under Regulation 4.
REIT (trust) level: Trust registered under the Registration Act, 1908 + trust deed with REIT as main object + assets valued at the minimum set by the Regulations (₹500 crore as per the text taught; confirm against the current Regulations); The asset-value threshold is subject to amendment. Check it against the latest consolidated text and ICSI material before you write it in an answer.
Sponsor net worth: Sponsors together ≥ ₹100 crore; each sponsor ≥ ₹20 crore; Both tests must be passed. Passing the collective test alone is not enough.
Sponsor experience and standing: At least 5 years' experience in the real estate industry (development or fund management in real estate); fit and proper person; Sponsors must be companies, LLPs or bodies corporate incorporated in India. There is also a separate condition on unit holding after the issue. As amended, sponsors together must hold a minimum of 15% of the post-issue units, with each sponsor holding at least 5%. That minimum 15% is locked in for 3 years from listing. Any holding above the minimum is locked in for one year only. This is an additional condition, not part of the net worth test. Confirm the current percentages and periods in the latest Regulations.
Manager criteria: Net worth ≥ ₹10 crore; at least 5 years' experience in fund management, advisory services, property management or real estate development; at least 2 key personnel with 5 years' experience each; fit and proper; at least half the directors independent and not directors of another REIT manager; The manager must also have adequate infrastructure and resources to carry out its functions. Check each limb separately (Reg 4(2)(b)).
Trustee criteria: Registered with SEBI as a debenture trustee; not an associate of the sponsor or manager; fit and proper; meets the other conditions prescribed in Reg 4(4); The independence of the trustee is the most common exam point. Registration alone is not enough.

How to solve SEBI (REITs) Regulations, 2014: Registration and Eligibility questions

Use this order for any question on registration or eligibility. It keeps your answer in the provision, analysis, conclusion format.

1Identify who is being tested: the REIT trust, the sponsor, the manager or the trustee. Many questions test more than one.
2State the rule in one line: no REIT without SEBI registration under Regulation 3, and eligibility under Regulation 4.
3List the criteria for the party concerned: net worth, experience, fit and proper status, independence, form of entity.
4Match each fact in the question to a criterion. Write the number or fact next to the threshold, for example ₹15 crore against ₹20 crore.
5Check the collective and the individual tests separately where both exist, as for sponsor net worth.
6Check independence: is the trustee an associate of the sponsor or manager? Are the roles held by separate persons?
7Conclude clearly: eligible, not eligible, or eligible once a named defect is cured. Give the reason in one line.
8Add a practical point if asked: file Form A with fee, attach trust deed and details of the parties, and respond to SEBI queries.

Quickest way: Party-by-party checklist

When to use it: Use it when time is short, or the question is a short note such as 'State the eligibility conditions for a sponsor'.

Write the three parties: sponsor, manager, trustee.
Under each, write only the numbers and tests: sponsor ₹100 crore collective and ₹20 crore each, 5 years in real estate; manager ₹10 crore, 5 years' relevant experience, 2 key personnel with 5 years each, half the directors independent; trustee SEBI-registered debenture trustee and not an associate of sponsor or manager.
Add the common label to all three: fit and proper person.
Add the trust-level line: registered trust, REIT as main object, assets valued at the prescribed minimum (₹500 crore as taught; check the current Regulations).
Add one line on the sponsors' post-issue holding: minimum 15% together (each at least 5%), locked in for 3 years from listing, with any excess locked in for one year, as per the current Regulations.
Finish with one line on the Form A application and SEBI's grant of registration.

Common mistakes in SEBI (REITs) Regulations, 2014: Registration and Eligibility

Saying a REIT is a company or a body corporate.
Students link 'investment vehicle' with a company because shares and units sound alike.
Fix: Write that a REIT is a trust registered under the Registration Act, 1908. Only the sponsor and manager are companies, LLPs or bodies corporate.
Applying only the ₹100 crore collective net worth test to sponsors.
The larger figure is easier to remember than the per-sponsor limit.
Fix: Always run both tests: ₹100 crore collectively and ₹20 crore for each sponsor.
Mixing up the manager's and the sponsor's net worth limits.
Both are small numbers of crores and look alike.
Fix: Remember sponsor ₹20 crore each (₹100 crore together) and manager ₹10 crore. Write them under separate headings.
Ignoring who owns or controls the trustee.
Students check only that the trustee is SEBI-registered.
Fix: Also check that the trustee is not an associate of the sponsor or manager. Registration alone is not enough.
Forgetting the fit and proper person test.
It has no number, so it is easy to treat as optional.
Fix: State it for the sponsor, manager and trustee. Mention that past conduct, such as convictions, can disqualify a party.
Quoting thresholds from memory without noting they may have been amended.
Notes copied from older sources may be out of date.
Fix: Revise from the latest consolidated Regulations and the ICSI material. Use the current figures in the answer.

Worked examples

Example 1

Three companies propose to sponsor a REIT. Their net worths are ₹65 crore, ₹30 crore and ₹15 crore. Each has over five years' real estate development experience. Examine their eligibility on the net worth criterion.

Show the solution

Rule: sponsors together must have net worth of at least ₹100 crore, and each sponsor at least ₹20 crore.
Collective test: 65 + 30 + 15 = ₹110 crore. This is above ₹100 crore, so the collective test is met.
Individual test: the first sponsor has ₹65 crore (meets), the second ₹30 crore (meets), the third ₹15 crore (below ₹20 crore, fails).
Experience is satisfied as each has more than five years' experience.
Conclusion: the group fails the individual test because of the third company.

Answer: The proposed sponsors are not eligible as a group. The collective net worth of ₹110 crore meets the ₹100 crore test, but the third company's ₹15 crore is below the ₹20 crore individual requirement. Dropping that company does not cure the defect. The remaining two together have 65 + 30 = ₹95 crore, which fails the ₹100 crore collective test. So an additional or replacement sponsor with at least ₹20 crore net worth is needed, bringing the total to at least ₹100 crore (for example, ₹95 crore + ₹20 crore = ₹115 crore).

Example 2

Skyline Estates Ltd wants to register a REIT. Skyline Trusteeship Pvt Ltd, a SEBI-registered debenture trustee and a wholly owned subsidiary of Skyline Estates Ltd, is proposed as trustee. The manager has net worth of ₹12 crore and five years' fund management experience in real estate. Advise on eligibility.

Show the solution

Identify the parties: Skyline Estates Ltd is the sponsor, the manager is a separate entity, and the trustee is Skyline Trusteeship Pvt Ltd.
Trustee test: it must be SEBI-registered as a debenture trustee (met) and must not be an associate of the sponsor or manager.
Facts: the trustee is a wholly owned subsidiary of the sponsor, so it is an associate of the sponsor. The independence test fails.
Manager test: net worth ₹12 crore exceeds ₹10 crore, and five years' experience meets the experience requirement. This is satisfied, subject to the other conditions such as key personnel and fit and proper status.
Conclusion: the application cannot succeed with this trustee.

Answer: The manager meets the net worth and experience criteria. The proposed trustee does not qualify, because it is an associate of the sponsor even though it is SEBI-registered. Skyline should appoint an independent SEBI-registered debenture trustee that is not an associate of the sponsor or manager. It can then file Form A with the fee and documents.

Exam tips

Answers are written and case-based. Always use provision, analysis, conclusion, and show the numbers in the facts against the thresholds.
Memorise a compact table of figures for the sponsor, manager and trustee. Many questions are really number-matching.
Look for a hidden independence issue, such as a trustee that is a subsidiary or group company of the sponsor or manager.
Write 'fit and proper person' for each party. It is a cheap mark that many students skip.
If you are unsure of an amended figure, state the rule clearly and name the Regulation. Do not invent a section number.

Practice questions from Real Estate Investment Trusts

SEBI (REITs) Regulations, 2014: Registration and Eligibility: frequently asked questions

Who can sponsor a REIT under the SEBI REIT Regulations, 2014?

A sponsor must be a company, LLP or body corporate incorporated in India and be a fit and proper person. The sponsors together must have a net worth of at least ₹100 crore, each must have at least ₹20 crore, and they need at least five years' experience in the real estate industry (development or fund management in real estate).

How do I register a REIT with SEBI?

The trust is first created and registered under the Registration Act, 1908, with a trust deed whose main object is REIT activity. It then applies to SEBI in the prescribed form (Form A) with the fee. SEBI grants registration if the trust and its sponsor, manager and trustee meet the eligibility conditions.

Can the sponsor's group company act as the trustee?

No, not if it is an associate of the sponsor or manager. The trustee must be SEBI-registered as a debenture trustee, independent of both, and fit and proper. This keeps the trustee's oversight genuine.

Are the thresholds in the REIT Regulations fixed?

No. SEBI has amended the Regulations several times. Always study the latest consolidated text and the current ICSI material before the exam.