SEBI Modifies REIT And InVIT Guidelines To Ease Businesses

SEBI Modifies REIT And InVIT Guidelines To Ease Businesses

The changes are effective immediately

The Securities and Exchange Board of India (SEBI) has made alterations to the guidelines involving nomination rights of unitholders of real estate investment trusts (REITs) and infrastructure investment trusts (InVITs) to appoint directors. This will ease the stakeholders in doing business.

While REITs allow investors to pour funds into commercial real estate options, InvIT provides the option of investing in a portfolio of infrastructure assets.

Until now, unitholders exceeding a specified ownership threshold could nominate one director to the Board of the REIT's or InvITs' Manager. However, if an entity had the right to nominate a director as a shareholder or lender, it could not use its unitholder status.

This framework has been altered.

Thus, if the right to appoint a nominee director is due to certain conditions specified in the SEBI (Debenture Trustees) Regulations, 1993 (defaults on payments or security creation), the restriction on unitholders does not apply.

The changes were introduced after participants requested the markets regulator to provide clarity on the availability of the right to nominate a director on the Board.