SEBI Issues Consultation Paper is to Seek Comments on Framework for Issuance of Subordinate Units by REITs and InvITs

Consultation Paper DDHS – POD 2, Dated 09.12.2023

The Board has notified the consultation paper to seek comments from the public on the framework for issuance of subordinate units by REITs and InvITs to sponsor(s), their associates and sponsor group and framework for Unit Based Benefits for the employees of the Manager of REIT and Investment Manager of InvIT.

Now, Subordinate units can be issued only to the sponsor(s), its associates and sponsor group Also, subordinate units shall carry only inferior voting or any other inferior rights.

Further, any issuance of subordinate units post initial offer shall require prior approval from seventy five percent of the unitholders by value. Sponsor(s), sponsor group, associates of sponsor(s) and any other parties related to the transaction shall not vote on such matter

Also, the manager of REIT/Investment Manager of InvIT may offer Unit Based Employee Benefits (UBEB) schemes for their employees based on the units of REIT/InvIT. Further, the implementation of UBEB scheme shall be done through a separate Employee Benefit Trust which shall be created by Manager of REIT/Investment Manager of InvIT.

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