Sebi releases framework for unitholders of REITs, InvITs to nominate directors

Once the eligibility is confirmed, the manager has to ensure that the appointment is done within 30 days of the confirmation.

Unitholders of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) now have the framework to nominate directors on the boards of the investment manager of the trusts.

The eligibility of the unitholders will be decided based on the unitholding pattern as on September 30, 2023.

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In two circulars issued on September 11, the Securities and Exchange Board of India (Sebi) detailed the framework for this and asked the investment managers to inform the unitholders of this within 10 days from September 30 and to request unitholders to send in their nominations if they wish to exercise this right.

Eligible unitholders will have to inform the investment manager of the trusts in writing of their proposed candidate for the nominee director, along with the following details: name of the candidate; Director Identification Number (DIN) of the candidate; and a brief profile of the candidate, including age, educational qualifications, professional qualifications, nationality, occupation, address, experience in the sector and sub-sector in which the trust operates and directorship in other entities, together with back-up documents. The unitholders will also have to inform details of any outstanding criminal action, regulatory action or material civil litigation against the candidate.

The eligibility of the nominee director will be confirmed by the investment manager, based on the evaluation done by the Nomination and Remuneration Committee and/or the Board of Directors of the investment manager in line with the policy formulated for this and within 10 days of receipt of notice from eligible unitholders.

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Once the eligibility is confirmed, the manager has to ensure that the appointment is done within 30 days of the confirmation.

If the candidate is found to be ineligible or unsuitable, then the manager should inform the unitholders of the same in writing within 10 days of the receipt of unitholders’ suggestion. Then the unitholders may submit another candidate within days from the date of receipt of the manager’s communication.