Board nomination rights to unitholders of Real Estate Investment Trusts (REITs)
Summary
This circular establishes the framework for unitholders holding at least ten percent of units to nominate one director on the Manager's board. It mandates the REIT Manager to monitor eligible unitholder status monthly and report to the Trustee. The document outlines specific definitions, conditions for nomination, and a procedural timeline for the first-time exercise of these rights. This section outlines the annual nomination process for Unitholder Nominee Directors, including timelines for intimation and eligibility assessment based on year-end holdings. It details the conditions under which a nominee remains in office or must resign, such as withdrawal of nomination, change in director, or falling below the required ten percent unitholding threshold. Finally, it mandates amendments to the Trust Deed and Investment Management Agreement to incorporate these board nomination rights within six months.
Text
Regulation 4(2)(g) of SEBI (Real Estate 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 Manager.
The Manager of the REIT shall, within ten days from the end of each calendar month, review whether the Eligible Unitholder(s) who have exercised the board nomination right 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 REIT, 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 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; if an entity has nomination rights in other capacities (shareholder/lender), it cannot nominate as a unitholder.
If the 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 Manager shall formulate and adopt a policy regarding qualifications, criteria, evaluation parameters, remuneration, removal, and role of the Nomination and Remuneration Committee 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) is a party.
The Manager shall send a written intimation to all unitholders requesting them to inform if any Eligible Unitholder(s) wish to exercise the right to nominate a Unitholder Nominee Director, within ten days from the end of September 30, 2023.
Eligible Unitholder(s) who wish to exercise this right shall inform the Manager through a written notice within ten days of receipt of the intimation from the Manager.
The Eligible Unitholder(s) shall inform the Manager in writing of the proposed candidate along with name, DIN, profile, criminal/regulatory history, Companies Act details, and eligibility confirmations.
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Source: SecMarx — Board nomination rights to unitholders of Real Estate Investment Trusts (REITs). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.