The Securities and Exchange Board of India's (Sebi) view on the proposal has come in response to a clarification sought by Puravankara Projects.
The regulator said the company's plan of selling commercial office space will be executed in two stages.
At first, developing and conveying the title of identified salebale unit to the purchaser; and second, primary leasing of identified and saleable unit from each purchaser to Puravankara and further sub-leasing of these units collectively along with co-owners to prospective tenants through the realty major as the lease manager.
Subsequently, rental income received from the units leased collectively to tenants shall be transferred proportionately to each purchaser.
According to Sebi, the first stage of the transaction is a typical real estate transaction between separate individual on the one hand and the developer on the other.
Regarding the second stage, Sebi said that sale of immovable property can be made only by a registered instrument and an agreement of sale would not create any interest or charge on its subject matter.
In an informal guidance, Sebi said the commercial real estate scheme floated by Puravankara can not be termed CIS as there was no pooling of funds involved offering any assured returns by the company.
However, the regulator said it will initiate appropriate action against Puravankara if the 'facts and circumstances' stated by the company are found to be incorrect.
Generally, a scheme is treated as CIS if the payments made by the investors are collected and utilised for the purposes of the scheme and the investors are expecting a profit on their investment.
As per Sebi norms, any pooling of funds under any scheme that involves a corpus amount of Rs 100 crore or more would be deemed as a CIS. Investors in such schemes do not have day-to-day control over the scheme, among others.