SEBI Enhances Governance Framework for Unitholders in REITs and InVITs

SEBI has revised rules to enhance the nomination rights of unitholders in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InVITs). This allows unitholders who meet certain conditions to appoint directors, providing more clarity and flexibility. The changes take immediate effect, addressing market participants' concerns.

In a move to streamline governance and enhance ease of doing business, SEBI has amended the framework for the nomination rights of unitholders in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InVITs).

Previously, unitholders exceeding a specific ownership threshold could nominate one director to the board of the REIT or InvIT's manager. The new amendment allows exceptions if the right to appoint a nominee director is due to specific conditions in the SEBI (Debenture Trustees) Regulations of 1993, such as payment defaults or security creation. This exception provides added flexibility for unitholders who are also lenders.

The revised framework takes effect immediately, aiming to clarify the nomination rights available to unitholders acting in dual capacities (both as investors and lenders), thus addressing concerns raised by market participants.