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I. From Concept to Market Reality: A Decade of Growth
India's Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) were conceived in the aftermath of the 2008 global financial crisis as vehicles to channel long-term institutional capital into India's chronic infrastructure and real estate funding gaps. The regulatory architecture arrived in stages: SEBI issued the InvIT Regulations and the REIT Regulations in 2014, with the first REIT, Embassy Office Parks, listing on the National Stock Exchange only in April 2019, and the first InvIT, IRB InvIT, listing in May 2017.
The years since have seen the market deepen considerably. As of 2026, India has six listed REITs and around eight publicly listed InvITs spanning commercial and residential real estate, road, power transmission, gas pipeline, and renewable energy infrastructure. The combined assets under management (AUM) across the sector has crossed INR 10 lakh crore. SEBI has expanded the framework further through the Small and Medium REIT (SM REIT) notified in 2024, which seeks to democratise fractional ownership of commercial real estate for smaller investors.
Crucially, SEBI has not been a passive regulator. Amendments to both the REIT and InvIT Regulations have been issued at regular intervals, in 2019, 2020, 2021, 2022, 2023, and 2024, tightening governance standards, broadening distribution norms, introducing leverage limits, strengthening related party transaction oversight, and aligning select provisions with the maturer SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('LODR').
Yet beneath this narrative of growth and regulatory diligence lies a persistent and under-discussed problem: the compliance architecture for REITs and InvITs remains incomplete in ways that create genuine legal uncertainty, operational inconsistency, and professional risk for investment managers, trustees, company secretaries, and compliance officers. This article examines those gaps, as a practitioner's account of where the framework falls short of its own ambitions.
II. The Reporting Architecture: Form Without Substance
At its core, continuous disclosure is the nervous system of any listed securities market. For equity-listed companies, Schedule III of the LODR provides a detailed taxonomy of events that must be reported, categorised by whether prior or post-event intimation is required, with prescribed timelines of 24 hours, 12 hours, or immediately, as the case may be. This granularity provides both issuers and regulators with an unambiguous compliance standard. REITs and InvITs have no equivalent framework.
The gap begins even earlier than materiality: the Regulations do not prescribe a list of events for which prior intimation must be filed with the exchanges before they occur, nor any timeline or mechanism for making such intimations — a category that, for equity-listed companies, is kept analytically distinct from post-event material disclosures. The REIT and InvIT Regulations require disclosure of 'material events and information' but provide neither a comprehensive list of what qualifies as material for these specific instruments, nor a mechanism for determining materiality. This is not a trivial lacuna. REITs and InvITs are fundamentally different from operating companies: their value drivers are net asset value movements, occupancy rates, distribution per unit (DPU) declarations, changes in portfolio composition, lease re-pricing, and leverage ratios, none of which map cleanly onto the Schedule III categories designed for industrial corporates or financial companies.
The result is inconsistency in practice. One investment manager may treat a change in occupancy above a certain threshold as a material event and file an intimation; another may conclude that no specific trigger exists and remain silent. Both positions are legally defensible, and that itself is the problem. Regulators cannot supervise the market effectively when issuers are operating without a common disclosure standard.
Beyond the absence of a material events list, the filing infrastructure on stock exchanges has not kept pace. Exchange portals designed for equity and debt securities present dropdown menus, XBRL schemas, and compliance modules that are structured around corporate constructs - shareholders versus unitholders, ordinary and special resolutions - all of which sit awkwardly with the REIT/ InvIT architecture.
Investment managers report encountering situations where the applicable category simply does not exist in the filing portal, forcing them to shoehorn disclosures into ill-fitting buckets. The divergence between BSE and NSE in their approach to XBRL submissions has compounded matters further: NSE has indicated that PDF submissions are sufficient until REIT/ InvIT-specific XBRL formats are developed, while BSE permits the forced-fitting of existing formats. The problem is not confined to a handful of forms: XBRL schemas prescribed for the secretarial audit report, the annual secretarial compliance report, the notice of a general meeting, and the issuance of securities are all built around corporate-form fields — 'shareholders', 'ordinary and special resolutions', 'general meetings' — that do not correspond to unitholders, a Trustee, or a trust's governance structure, leaving filers uncertain whether the XBRL applies to them at all. Entities therefore have no single, authoritative compliance benchmark. Nor is the gap confined to exchange-facing disclosures: no standardised format has been prescribed for the investment manager's periodic reporting to the REIT/InvIT Trustee — an internal control point of real governance significance — leaving this, too, to bespoke practice. And where unitholders vote at a meeting, there is no prescribed timeline or mechanism for filing the voting results with the stock exchanges, an obligation long settled for equity-listed companies.
III. The Related Party Transaction Framework: A Significant Structural Gap
Few compliance areas carry higher governance stakes than related party transactions. In a REIT or InvIT structure, where the investment manager, the sponsor, the project manager (for InvITs), and their affiliates are inherently intertwined with the trust, the potential for conflicts of interest is systemic rather than incidental. SEBI recognised this risk in the context of listed equity companies and, through successive amendments to the LODR, constructed a detailed RPT framework specifying materiality thresholds, approval flows (audit committee and board), omnibus approval procedures, shareholder approval requirements for material transactions, and half-yearly disclosures to exchanges.
For REITs and InvITs, the regulatory foundation for RPT governance is present in principle but critically underdeveloped in practice. The regulations require RPTs to be disclosed and subjected to approval by the audit committee and unitholders for transactions above specified thresholds. What they do not provide is: a materiality threshold for determining when a related party transaction requires disclosure (as opposed to mere approval); a framework for omnibus approvals for repetitive ordinary-course transactions; prescribed timelines and formats for reporting RPTs to unitholders and exchanges; or the procedural architecture for audit committee review of RPTs in a trust structure.
In practice, entities have responded by designing their own internal RPT protocols, with filings bundled into periodic financial statements. This creates a situation where regulatorily mandated governance is being discharged through ad hoc internal procedures, none of which are independently auditable against a prescribed standard. SEBI's 2023 and 2024 amendments to the LODR significantly tightened the RPT regime for listed companies, introducing new materiality thresholds, tightening the definition of related parties, and strengthening audit committee responsibilities. The parallel universe of REITs and InvITs was left largely unaddressed in these rounds of reform, widening rather than narrowing the gap between the two frameworks.
IV. The PIT Regulations: A Framework Designed for a Different Animal
The SEBI (Prohibition of Insider Trading) Regulations, 2015 ('PIT Regulations') apply to REITs and InvITs, and rightly so, these are publicly traded securities whose value is susceptible to information asymmetry. The difficulty is that the PIT Regulations were designed for listed companies, and their core concepts do not translate cleanly into the REIT/InvIT context.
Consider the definition of Unpublished Price Sensitive Information ('UPSI'). For listed companies, the PIT Regulations identify specific categories of UPSI: financial results, dividends, material agreements, restructurings, mergers, changes in key management, and so on. For a REIT or InvIT, the price-sensitive events are structurally different: changes in net asset value (NAV) or quarterly valuation results; DPU declarations; material changes in occupancy rates, lease terms, or tenant composition; breach of, or compliance with, investment conditions applicable to the REIT/InvIT; entry into or exit from ROFO/ROFR arrangements; changes in leverage ratios; and changes in portfolio composition through asset acquisitions or disposals. None of these are specifically captured in the UPSI definition as it stands.
The definition of 'connected person' presents an equally pointed problem. In the listed company context, connected persons are typically understood to include directors, KMPs, and those in functional proximity to price-sensitive information within the company. In a REIT or InvIT, the parties with structural access to UPSI include the investment manager and its key personnel, the trustee and its employees, the sponsor, the independent valuer (who produces NAV outputs before they are published), the statutory auditor, and the project manager in the case of an InvIT. This is a structurally different group from the connected persons contemplated by the PIT Regulations as currently worded. Without specific identification of these parties, the disclosure of trades and pre-clearance requirements operate in a zone of interpretive uncertainty.
The practical consequence is that investment managers and their compliance officers are applying frameworks designed for a corporate ecosystem to a trust structure with fundamentally different information flows, often with no regulatory guidance on how to effect the translation.
V. Other Compliance Challenges: A Panoramic View
Beyond the three areas examined above, the compliance landscape for REITs and InvITs contains several further gaps that warrant recognition.
Unfilled enabling provisions. The REIT and InvIT Regulations contain numerous 'as may be prescribed' or 'as may be specified' clauses, delegations to SEBI to issue subsidiary prescriptions on specific procedural matters. Several such prescriptions remain unissued: notably the manner for SM REIT scheme delisting, the refund mechanism upon a failed asset acquisition under SM REIT regulations, and the manner of conducting e-voting for unitholders meetings. Each of these gaps is a gap in operational certainty for entities that have no prescribed procedure to follow.
Record date framework. While specific provisions exist for fixing record dates in connection with distributions and rights issues, no comprehensive framework has been prescribed for record dates in respect of other corporate actions or for e-voting in unitholders' meetings. Entities currently borrow by analogy from the Companies Act or other regulations, an approach that is pragmatic but not legally anchored.
Acquisition and restructuring reporting. Where a REIT or InvIT proposes to acquire a new special purpose vehicle (SPV) after its initial listing, the regulatory process is incompletely defined. Questions around pre-acquisition regulatory approvals (whether any are needed), the stage at which reporting obligations are triggered, the formats for reporting, and the treatment of regulatory compliance continuity during the transition period all remain without specific answers in the framework.
Penalties and enforcement. The absence of a specific, itemised penalty schedule for REIT/InvIT compliance defaults, equivalent to the Schedule III penalties applicable to LODR violations means that enforcement is necessarily ad hoc. Investment managers, trustees, and their advisors cannot readily calibrate the regulatory cost of a specific compliance default. This is not just a theoretical concern: it affects the pricing of compliance risk, the design of internal compliance programmes, and the accountability of responsible persons.
VI. Concluding thoughts
It is important to acknowledge that SEBI has been an engaged and responsive regulator for the REIT and InvIT market. The frequency of regulatory amendments demonstrates a genuine intent to build a world-class regulatory infrastructure for these instruments. India's REIT market has attracted significant global institutional interest precisely because the regulatory framework has been taken seriously.
But regulatory reform in India has historically proceeded from the general to the specific over time — the architecture is built first, and the operational detail follows. For a market at the scale and maturity that India's REIT and InvIT sector has now reached, the gap between the general framework and the operational specificity needed for consistent compliance has become consequential. The issues described in this article are not merely technical inconveniences. They create legal uncertainty that compliance professionals must absorb at personal professional risk; they produce inconsistency in investor disclosures that affects market confidence; and they leave investment managers without the procedural certainty that is a precondition for institutional governance.
India's REIT and InvIT market is a success story in the making. The capital has come; the assets are there; the investor community is growing. What the market now needs — more than further framework innovation — is the unglamorous but essential work of filling the operational detail that will allow its compliance architecture to function as reliably as the underlying assets that it serves.
The views expressed in this article are solely those of the author in her personal capacity and are based on her understanding of the applicable legal and regulatory framework. They do not necessarily represent the views, policies or practices of organisation with which the authors is associated.
