Direct Tax Services
Select Your Location
Infrastructure and real estate have been regarded as India’s “sunshine sector” since the turn of the century and have significantly contributed to the development of one of the world’s fastest-growing economies. A country’s total development is accelerated by its well-developed infrastructure. As a result, the capital base that is available for the expansion of important economic sectors as well as for the economy’s continuous growth is increased. It also makes it easier for a consistent influx of private and international investments.
Investment managers of Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) have been urged by the market regulator to make sure that holding company and special-purpose vehicle (SPV) assets are stored in dematerialised form.
The managers of the trusts have until June 30, 2023, to implement the adjustment if securities are held in physical form. Investors are issued shares of holding companies or Special Purpose Vehicles through which InvITs and REITs keep their assets. On May 22, the Securities and Exchange Board of India (Sebi) published two orders on the dematerialisation of securities, one for InvITS and one for REITs.
Table of Contents
A Special Purpose Vehicle (SPV) is a distinct legal body that is typically established for a particular, well-defined and legitimate purpose. It serves as the primary parent company’s bankruptcy remote. Because its operations are limited to acquiring and financing particular assets and projects, the Special Purpose Vehicles can fulfil its obligations in the event of a company’s bankruptcy.
A holding company is a business that doesn’t engage in any active business initiatives, operations, or other responsibilities for itself. Instead, it exists so that it can own assets. Therefore, the business does not engage in the purchase or sale of any goods or services. Instead, it was established so that it could take over one or more businesses.
Before learning about the dematerialisation procedure, it is crucial to understand the Demat account concept because you can only dematerialise your physical shares by opening a demat account in trade. Demat, or dematerialisation, is the process of converting physical securities into electronic form.
Because of this, a trader can hold, transfer, and transact securities using a demat account without having to deal with physical securities. As a result, trading is now a lot faster, safer and more effective way to execute trades and store assets.
Mutual funds, bonds, and stock assets can all be managed with a demat account. It is a lot like having a bank account. The sole distinction is that a demat keeps securities, such as shares, bonds, or debentures, rather than money in a bank account. When you have a Demat account, you do not need to take physical shares around with you.
The process of dematerialisation involves converting an investor’s physical certificates into an equivalent number of securities in electronic form and crediting those securities to the BO’s account with his depository participant.
The regulatory authority issued two new circulars on the Dematerialization of securities of Hold Cos and Special Purpose Vehicles held by Infrastructure Investment Trusts (InvITs) and the Dematerialization of securities of Hold Cos and Special Purpose Vehicles held by Real Estate Investment Trusts (REITs). New circulars of SEBI are combined and discussed below:
Many investors still own physical share certificates from purchases made prior to 1996. However, SEBI has mandated that the dematerialisation process be used to transform the physical shares into electronic form. These consist of the following:
Safety: Dematerialisation reduces the possibility of shares being stolen, falsified, or misplaced, hence enhancing the holding’s security. Theft is no longer an issue because they are kept in safe depositories.
Convenience: Due to the electronic nature of dematerialised shares, issues with storage and maintenance are no longer an issue. You won’t have to worry about misplaced or damaged credentials any longer.
Accessibility: All sharing records are kept online and electronically. Because of this, you can access dematerialised shares practically anytime and almost anywhere.
Flexibility: Dematerialisation boosted access for small investors by increasing flexibility. Now, there are no more limitations on the number of shares that can be sold or purchased.
One must complete a DRF (Demat Request Form) that is provided with the deposit participant and submit it along with the physical certificates that are to be dematerialised in order to dematerialise physical securities. For each ISIN, a separate DRF must be filled out. The following describes the entire dematerialisation process:
Like buying and selling physical securities, trading in dematerialised securities follows a similar process. The distinction is in how securities are delivered (in a sale) and received (in a purchase).
The overall goal of modernising and bolstering India’s securities market infrastructure is supported by SEBI’s decision to require the dematerialisation of assets owned by REITs and InvITs. It intends to improve the operation of REITs and InvITs, which are well-liked investment vehicles for real estate and infrastructure assets, by increasing efficiency, transparency, and investor confidence.
Read our Article:All About Real Estate Investment Trusts in India
I am a driven and meticulous professional who completed B.Com BL (Hons) from Tamil Nadu Dr. Ambedkar Law University and completed Master of Laws in specialization (Criminal Law with Cyber Crimes). I have extensive experience in Criminal Litigation and want to utilise my legal knowledge in writing also I have proficiency in writing legitimate content with comprehensive research. My core areas of interest are Business Law, Intellectual Property Rights, and Cyber crimes.
NBFC is incorporated under the Companies Act of 2013. The Ministry of Corporate Affairs (MCA) a...
Financial Institutions called Asset Reconstruction Companies ("ARCs") reconstruct and securitis...
Any person booked for an offence under the Criminal Procedure Code (CrPc) / the Code would be r...
The Reserve Bank of India regulates Non-Banking Financial Companies in India, and they are subj...
The Reserve Bank of India regulates Non-banking Financial Companies in accordance with the RBI...
Incorporation of a Limited Liability Company (LLC) is an attractive choice for small business o...
The Reserve Bank of India (the Bank) issued Non-Banking Financial Companies Acceptance of Publi...
A few years ago, investing in traditional investment categories like shares, bonds, real estate...
Compared to other organisations, the corporate governance of Non-Banking Financial Companies is...
India is emerging as a global powerhouse. India is a huge market and is witnessing rapid econom...
Are you human?: 1 + 2 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
The GST council meeting took a significant decision about the fate of realty firms in the GST regime. The council r...
13 May, 2019
According to RERA Act, RERA complaint may be filed either with the RERA or with the adjudicating officer. The compl...
31 Jul, 2017
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!