SEBI Overhauls PMS Rules, Eases REIT and InvIT Norms in Sweeping Board Decisions

SEBI's board meeting has delivered one of the more wide-ranging reform packages of the year, touching portfolio managers, foreign investors, real estate and infrastructure trusts, and market professionals' certification requirements in a single sitting.

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PMS Gets a Wider Investment Universe

Portfolio Management Services, or PMS, providers will now be able to invest client funds across a broader set of instruments, including initial public offerings, overseas securities, and primary debt issuances, categories that were previously either restricted or required additional approvals. The board also cleared a Portfolio Managers Route for Investing in Mutual Fund Units, which lets PMS players channel client money into direct mutual fund schemes and specialised investment funds, effectively narrowing the structural gap between PMS and mutual fund investing.

For PMS clients, a wider investment universe means portfolio managers can build more diversified, potentially more differentiated portfolios, though it also means investors need to pay closer attention to how much of their allocation now sits in less liquid categories like pre-IPO placements or overseas holdings.

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FPIs Get Broader Commodity Derivatives Access

Foreign portfolio investors will be allowed to participate in a wider set of non-agricultural commodity derivatives on Indian exchanges, an extension of access that has historically been more restricted for commodities than for equities and rates. Wider FPI participation typically brings deeper liquidity and tighter pricing to the underlying commodity futures market, benefiting domestic hedgers and traders even if the immediate impact is felt mostly by institutional participants.

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REIT and InvIT Unitholder Approvals Get Easier to Clear

In a change with direct relevance to REIT and InvIT investors, the board approved shifting the approval threshold for certain unitholder matters from 75 percent of all outstanding units to 75 percent of the votes actually cast. This is a meaningful practical difference: under the old rule, unitholders who simply did not vote were effectively counted against a resolution, making it harder to clear even genuinely popular proposals when participation was low. Measuring against votes cast instead makes governance decisions easier to pass without lowering the underlying approval bar for those who do participate.

This eases a long-standing friction point for REIT and InvIT managers seeking approval for related-party transactions, related structural changes, or sponsor exits, since low unitholder turnout will no longer automatically work against a proposal.

CAPSM Certification Cut-Off Moves to a More Practical Date

SEBI has also amended the Certification for Associated Persons in the Securities Market, or CAPSM, regulations, changing the cut-off date used to determine eligibility for age and experience-based certification exemptions. Previously tied to the date of notification, the cut-off will now be based on the date an individual actually appears for the certification examination or obtains Continuing Professional Education credits. This removes an awkward mismatch where a market professional's exemption eligibility could hinge on a regulatory notification date entirely disconnected from when they actually sat for their exam or training.

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Conclusion

Taken together, these SEBI board meeting decisions lean toward easing compliance friction across portfolio management, foreign investment, and REIT and InvIT governance, while making certification rules for market professionals more logically structured. Investors in REITs, InvITs, and PMS products should watch for the formal circulars implementing these changes, since board approvals typically translate into detailed operational rules over the following weeks.

The information in this article is for educational purposes only and must not be treated as investment advice. Stock markets are subject to risk, and past performance is not indicative of future results. Please verify all data independently and consult a registered investment adviser before making any investment decision. Univest Communications Private Limited, SEBI Registered Research Analyst, Registration No. INH000013776.

Frequently Asked Questions

What did SEBI decide in its latest board meeting?

Ans. SEBI approved a wider investment universe for portfolio management services, expanded FPI access to non-agricultural commodity derivatives, eased the REIT and InvIT unitholder approval threshold to 75 percent of votes cast, and revised the CAPSM certification cut-off date.

How does the new REIT and InvIT unitholder approval rule work?

Ans. The approval threshold for certain matters moves from 75 percent of all outstanding units to 75 percent of the votes actually cast, making it easier to clear resolutions when overall unitholder turnout is low.

What new investment options can PMS providers offer now?

Ans. Portfolio management services can now invest client funds in a wider range of instruments, including IPOs, overseas securities and primary debt, alongside a new route for investing in direct mutual fund schemes and specialised investment funds.

What changed for foreign portfolio investors under SEBI's new rules?

Ans. FPIs have been granted expanded access to non-agricultural commodity derivatives on Indian exchanges, broadening their participation beyond the more limited access they previously had in commodities.

What is the CAPSM certification cut-off change about?

Ans. The eligibility cut-off for age and experience-based certification exemptions under CAPSM regulations now uses the date an individual sits for the exam or obtains Continuing Professional Education credits, instead of the date the regulation was notified.

When will these SEBI reforms actually take effect?

Ans. Board approvals typically require detailed operational circulars before taking effect; investors and market participants should watch for SEBI's formal notifications implementing these changes.

Where can I track REIT and InvIT unit prices and fundamentals?

Ans. You can check live prices and fundamentals for listed REITs, InvITs and other securities using the Univest Screener.