**Summary:**
This circular, reference number SEBI/HOD/DDH/SPoD-2/CIR/2024/108, issued by the Securities and Exchange Board of India (SEBI) on August 6, 2024, announces an amendment to the Master Circular for Real Estate Investment Trusts (REITs) dated May 15, 2024, specifically concerning board nomination rights for unitholders of REITs.
The amendment modifies paragraph 18.2.2. b of Chapter 18 of the Master Circular, which previously restricted unitholders from nominating a director if they or their associates already possessed the right to nominate a director as a shareholder or lender to the Manager, REIT, or its HoldCos/SPVs.
The new provision states that the aforementioned restriction will not apply if the right to appoint a nominee director is available in terms of clause e of sub-regulation 1 of regulation 15 of the SEBI Debenture Trustees Regulations, 1993. This change aims to promote ease of doing business, responding to requests from market participants and based on recommendation of Hybrid Securities Advisory Committee (HySAC).
The circular takes effect immediately and is issued under the authority granted by Section 11(1) of the Securities and Exchange Board of India Act, 1992 and Regulation 42g of the SEBI Real Estate Investment Trusts Regulations, 2014. Stock Exchanges are advised to disseminate this circular on their websites. The circular is available on the SEBI website (www.sebi.gov.in) under the categories "Legal" and "Circulars".
For further information, contact Ritesh Nandwani, Deputy General Manager, Department of Debt and Hybrid Securities, at Tel No. 022-26449696 or via email at riteshn@sebi.gov.in.
Key Entities Referenced
Real Estate Investment Trusts REITs: A type of investment vehicle that owns and operates income-producing real estate.
Securities and Exchange Board of India SEBI: The regulatory body for the securities market in India.
Master Circular for Real Estate Investment Trusts: A comprehensive document providing guidelines and regulations for REITs.
Board of Directors: A group of people elected by the shareholders of a company to represent them and ensure that the company is run in their best interests
Hybrid Securities Advisory Committee HySAC: A committee that provides recommendations related to hybrid securities.
SEBI Debenture Trustees Regulations, 1993: Regulations governing debenture trustees in India.
Securities and Exchange Board of India Act, 1992: The act that established the Securities and Exchange Board of India (SEBI) and defines its powers and functions.
SEBI Real Estate Investment Trusts Regulations, 2014: Regulations specifically governing Real Estate Investment Trusts (REITs) in India.
CIRCULAR
SEBI/HO/DDHS/DDHS-PoD-2/P/CIR/2024/108 August 06, 2024
To,
All Real Estate Investment Trusts (REITs)
All Parties to REITs
All Recognised Stock Exchanges
All Depositories
Madam/Sir,
Sub: Amendment to Master Circular for Real Estate Investment Trusts (REITs)
dated May 15, 2024 – Board nomination rights to unitholders of REITs
1. Para 18.2.2. (b) of Chapter 18, titled “Board nomination rights to unitholders of
REITs”, of the Master Circular for Real Estate Investment Trusts dated May 15,
2024 requires as under:
“(b) Eligible Unitholder(s) shall be entitled to nominate only one Unitholder
Nominee Director, subject to the unitholding of such Eligible Unitholder(s)
exceeding the specified threshold. If the right to nominate one or more directors
on the Board of Directors of the Manager is available to any entity (or to an
associate of such entity) in the capacity of shareholder of the Manager or lender
to the Manager or the REIT (or its HoldCo(s) or SPVs), then such entity in its
capacity as unitholder, shall not be entitled to nominate or participate in the
nomination of a Unitholder Nominee Director.”
2. Market participants have requested to provide clarity on the availability of the right
to nominate a director on the Board of Directors of the Manager of REIT, to a
unitholder where such nomination right is also available to a unitholder in the
capacity of lender to the Manager or the REIT (or its HoldCo(s) or SPVs).
3. In order to promote ease of doing business and based on the request of the
industry and recommendation of Hybrid Securities Advisory Committee (HySAC),
Page 1 of 2it is proposed to insert the following proviso under under paragraph 18.2.2. (b) of
Master Circular for Real Estate Investment Trusts dated May 15, 2024:
“Provided that the above 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 clause (e) of sub-regulation (1) of regulation 15 of the SEBI
(Debenture Trustees) Regulations, 1993.”
4. This circular shall come into force with immediate effect.
5. This circular is being issued in exercise of powers conferred under Section 11(1)
of the Securities and Exchange Board of India Act, 1992 and Regulation 4(2)(g) of
the SEBI (Real Estate Investment Trusts) Regulations, 2014. This circular is issued
with the approval of the competent authority.
6. The recognized Stock Exchanges are advised to disseminate the contents of this
Circular on their website.
7. This Circular is available on the website of the Securities and Exchange Board of
India at www.sebi.gov.in under the category “Legal” and under the drop down
“Circulars”.
Yours faithfully
Ritesh Nandwani
Deputy General Manager
Department of Debt and Hybrid Securities
Tel No.022-26449696
Email id - riteshn@sebi.gov.in
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