Board nomination rights to unitholders of Infrastructure Investment Trusts (InvITs)
Summary
This circular establishes the framework for unitholders holding at least ten percent of units in an Infrastructure Investment Trust to nominate one director to the Investment Manager's board. It mandates that the Investment Manager review and report monthly on whether eligible unitholders continue to meet the threshold requirements. The document outlines specific definitions, conditions for nomination, and a procedural timeline for the first-time exercise of these rights following the circular's issuance. This section establishes the annual procedure for eligible unitholders to nominate Unitholder Nominee Directors and defines the conditions under which such directors must vacate their office. It mandates regular reviews of unitholding thresholds by the Investment Manager and outlines processes for changing or withdrawing nominations due to various events including death, disability, or removal. Finally, it requires amendments to the Trust Deed and Investment Management Agreement to incorporate these nomination rights and lists specific eligibility criteria for nominee candidates.
Text
Regulation 4(2)(h) of SEBI (Infrastructure Investment Trusts) Regulations, 2014 provides that unitholder(s) holding not less than ten percent of the total outstanding units shall be entitled to nominate one director on the board of directors of the Investment Manager.
The Investment Manager shall, within ten days from the end of each calendar month, review whether Eligible Unitholder(s) continue to hold the required number of units and submit such report to the Trustee.
Eligible Unitholder(s) shall mean unitholder(s) holding ten percent or more of the total outstanding units of the InvIT, either individually or collectively.
Unitholder Nominee Director shall mean a non-independent director nominated by Eligible Unitholder(s) on the Board of Directors of the Investment Manager.
Eligible Unitholder(s) shall have the right, but not the obligation, to nominate any person for appointment as Unitholder Nominee Director.
Eligible Unitholder(s) shall be entitled to nominate only one Unitholder Nominee Director, subject to the unitholding exceeding the specified threshold.
If unitholding of more than one unitholder is aggregated to qualify as Eligible Unitholder(s), such unitholders shall not be eligible to participate in any other group of Eligible Unitholder(s).
The Board of Directors of the Investment Manager shall formulate and adopt a policy regarding qualifications, criteria, evaluation parameters, remuneration, removal process, and role of committees for Unitholder Nominee Directors.
Unitholder Nominee Directors shall recuse themselves from voting on any transaction where such director, their associates, or the nominating Eligible Unitholder(s) are parties.
The Investment Manager shall send written intimation to all unitholders within ten days from the end of September 30, 2023, requesting them to inform if any Eligible Unitholder(s) wish to exercise nomination rights.
Eligible Unitholder(s) wishing to exercise the right shall inform the Investment Manager through written notice within ten days of receipt of intimation, reckoned based on unitholding pattern as on September 30, 2023.
Eligible Unitholder(s) must provide candidate name, DIN, profile, criminal/regulatory history, Companies Act details, and eligibility confirmations.
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Source: SecMarx — Board nomination rights to unitholders of Infrastructure Investment Trusts (InvITs). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.