Procedural framework for dealing with unclaimed amounts lying with Real Estate Investment Trusts (REITs) and manner of claiming such amounts
Summary
This circular establishes a procedural framework for Real Estate Investment Trusts (REITs) to handle unclaimed distribution amounts and outlines the process for unitholders to claim them. It mandates that REITs transfer unclaimed amounts to an Escrow Account within seven working days after a fifteen-day period, followed by subsequent transfers to the Investor Protection and Education Fund (IPEF). The document also specifies disclosure requirements on REIT websites, interest penalties for delays, and transition rules for existing unclaimed amounts. This section outlines the procedures for processing unitholder claims, including timelines for verification and payment by the Manager. It details the obligations of the REIT and Manager regarding the transfer of unclaimed amounts to the Investor Protection and Education Fund (IPEF) after seven years. Finally, it establishes the process for refund applications from IPEF and provisions for legal heirs or successors. This section contains Form A, a template for the REIT Manager to report details of unclaimed amounts transferred to the Investor Protection and Education Fund (IPEF). It also includes Form B, which serves as a refund applicatio
Text
Regulation 18(16)(b) of the SEBI (Real Estate Investment Trusts) Regulations, 2014 mandate that not less than ninety percent of Net Distributable Cash Flows (NDCFs) of the REIT shall be distributed to the unitholders.
Such distributions to be made by the REIT, shall be declared and made not less than once every six months in every financial year and shall be made not later than fifteen days from the date of such declaration.
any amount remaining unclaimed or unpaid out of the distributions declared by a REIT in terms of sub-clause (c), shall be transferred to the ‘Investor Protection and Education Fund’ constituted by the Board in terms of section 11 of the Act, in such manner as may be specified by the Board.
the unclaimed or unpaid amount of a person that has been transferred to the Investor Protection and Education Fund in terms of sub-clause (f), may be claimed in such manner as may be specified by the Board.
an application for claim of entitled amounts needs to be made by a unitholder to the REIT which shall process the claim and then seek refund from the Board for the said amount.
The provisions of this Circular shall come into effect from March 1, 2024.
for REITs having unclaimed amounts for less than 7 years, as on February 29, 2024, shall start computing interest, as per provisions of Part I of Annex - A, from March 1, 2024.
For REITs which shall be holding unclaimed amounts for more than 7 years, as on February 29, 2024, shall transfer the unclaimed amounts of the unitholders to IPEF, in compliance with the provisions of Part II of Annex - A, on or before March 31, 2024.
Where a distribution has been made by the Manager, but the payment to any unitholders has remained unpaid or unclaimed, up to fifteen days from the date of declaration, the Manager shall, within seven working days from the date of expiry of such period of fifteen days, transfer such unclaimed amounts to an Escrow Account to be opened by it on behalf of the REIT in any scheduled bank.
In case a default is made in transferring the amount referred above in paragraph (A)(1) of Part I or portion thereof to the Unpaid Distribution Account of the REIT, it shall pay, interest on the amount that has not been transferred to the said account, for the period of default i.e. from the date of default till the date of transfer to the Unpaid Distribution Account, at the rate of twelve percent per annum.
The Manager shall designate as ‘Nodal Officer’, a person who may either be a Director, Chief Financial Officer, Company Secretary or Compliance Officer of the Manager. Such officer shall be the point of contact for unitholders entitled to claim their unclaimed amounts, SEBI, Stock Exchange(s) and Depositories.
The Manager, shall, within a period of thirty days of transferring the unclaimed amount to the Unpaid Distribution Account, upload the details on the website of REIT, as given below: Amount lying unclaimed, Category, No. of unitholders, Date when amount became due, Date when unclaimed was transferred to Unpaid Distribution Account, Date when amount is to be transferred to IPEF.
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Source: SecMarx — Procedural framework for dealing with unclaimed amounts lying with Real Estate Investment Trusts (REITs) and manner of claiming such amounts. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.