The Securities and Exchange Board of India (SEBI) on July 10, 2024, sought public feedback regarding a proposed amendment to the master circulars for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). These amendments aim to bring clarity to the nomination rights of directors to their respective boards. The proposed changes suggest that the restriction on nominating a unitholder nominee director would not be applicable if the right to appoint a nominee director is available as per the Sebi (Debenture Trustees) regulations.
Amendment To Master Circular
"It is proposed to amend the Master Circular for InvITs dated May 15, 2024 and Master Circular for REITs dated May 15, 2024 to provide that the restriction relating to the right to nominate a Unitholder Nominee Director shall not be applicable if the right to appoint a nominee director is available in terms of the Sebi (Debenture Trustees) regulations," the consultation paper said inviting public feedback till July 29, 2024.
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The current norms only allow a unitholder whose holding exceeds a specified threshold to nominate a director in an InvIT or REIT. The proposed amendments address requests for clarification on the rights of unitholders to nominate a director to the board of the investment manager or manager of REITs and InvITs. "It has been represented by market participants to provide clarity on the availability of the right to nominate a director on the Board of Directors of the Investment Manager of InvIT / Manager of REIT, to a unitholder where such nomination right is also available to a unitholder in the capacity of a lender to the Investment Manager / Manager or the InvIT/REIT (or its HoldCo(s) or SPVs)," Sebi said.
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Sebi made several decisions in its June 28, 2024 board meeting to facilitate Ease of Doing Business for InvIT & REIT. This includes allowing shorter notice for unitholder meetings, placing investor complaints before the respective managers' Board of Directors quarterly, providing the option for electronic attendance at all unitholders' meetings, and reducing the trading lot for privately placed InvITs to Rs 25 lakh. Additionally, Sebi had a month earlier proposed to reduce the timeline for distributing dividends in REITs and InvITs to five days, but the final decision is pending.
