Foreign Investment in Real Estate Investment Trust (REIT) Schemes

      The existing provisions allow non-residents to invest in REIT Schemes listed at Stock Exchange and through new Public Offers. In order to further facilitate foreign investment in REIT Schemes, in addition to the existing provisions, it has been decided to allow general permission to REIT Management Companies (RMC) to issue their units through private placements and transfer such units, in favor of non-residents. Accordingly, the existing para 6 (A)(IV), 6(B)(IIIA), 6(B)(IV), 6(B)(VI), 7(i) , 7(iia), 7(vi)(a), 7(vi)(d), 7(vi)(h), 7(vi)(i) and 7(vii)(C)  of Chapter 20 of Foreign Exchange Manual, are hereby replaced with the followings: 

6(A)(IV)	A company or firm (including a partnership) or trust or mutual fund or private fund or real estate investment trust (REIT) fund incorporated, registered and functioning outside Pakistan, excluding entities owned or controlled by a foreign government.
6(B)(IIIA)	Private placement for issuance of new units of private funds established and operated by Private Fund Management Company licensed by SECP to provide private equity, venture capital fund management services; and REIT Funds established and operated by REIT Management Company licensed by SECP.
6(B)(IV)	Transfer of shares/units of companies/funds covered by sub para (III), (IIIA) and (IIIB), under offer for sale or any other arrangement.
6(B)(VI)	Issue of rights shares and bonus shares and issuance of additional units as right or bonus and/or reinvestment of dividends in all those cases where shares/units are held on repatriable basis by ‘persons resident outside Pakistan’ in accordance with the general or special permission of the State Bank.
7(i)	Companies issuing shares or REIT Funds issuing units, out of new public offers, on repatriable basis, as permitted under sub para (B) (I) of preceding paragraph 6, may open foreign currency collection accounts with banks abroad or in Pakistan for receiving the subscription in foreign currency. They may also allow refunds from these accounts to unsuccessful applicants. The amount subscribed by the successful applicants should be repatriated to Pakistan and foreign currency accounts closed within a week of allotment of shares/units. Proceeds Realization Certificate in evidence of subscription money having been repatriated to Pakistan shall be obtained by the company from the concerned Authorized Dealer for submission in original to the designated Authorized Dealer with the form prescribed at Appendix V- 95.
7(iia)	In the case of remittance of subscription money directly to Pakistan and its payment to the fund’s rupee account (opened in the name of trustee), private funds/REIT funds may issue units, in terms of paragraph 6(B)(IIIA), for the rupee equivalent paid by the concerned Authorized Dealer as shown in the Proceeds Realization Certificate (s).
7(vi)(a)	In case of issue of ordinary shares including Modaraba Certificates/Trust and Fund Units out of public offers under paragraph 6 (B) (I) Bank’s Proceeds Realization Certificate (PRCs) in original with copy of the consent/permission of the Securities & Exchange Commission of Pakistan (SECP).
7(vi)(d)	In case of issue of rights shares or units of REIT funds through right under paragraph 6 (B) (VI) PRCs in original with copy of Board’s Resolution.
7(vi)(h)	In case of transfer of listed shares and units of funds under paragraph 6 (B) (II) Stock Broker’s Memo and PRCs in respect of the cost of shares/units and transfer stamp money, both in original. Where the sale of shares/units is negotiated privately, documents establishing the deal and the price of the share/unit on Stock Exchange on the date of deal, should be furnished.
7(vi)(i)	In case of transfer of shares/ units of un-listed companies/ funds  under paragraph 6 (B) (IV) Auditor’s certificate for break-up value or net asset value in original, a copy of the audited accounts of the respective year, documentary evidence of the agreed sale price and original PRCs in respect of cost of shares/units and transfer stamp money (if applicable).
7(vii)(C)	For disinvestment proceeds due to maturity of units of fund or revocation of REIT fund, issued in terms of Para 6(B)(IIIA) above, the designated Authorized Dealer shall allow the remittance on submission and review of: Winding-up report duly verified by external auditor and trustee of fund or in case of REIT fund revocation report by the trustee duly verified by the external auditor. Unitholders investment statement Distributions statement (including principal repayment

2.        The ADs are advised to bring the above amendments to the notice of all their constituents for meticulous compliance.