SEBI lays down ‘Framework for Unit Based Employee Benefit Scheme’ vide SEBI (REIT) (Second Amendment) Regulations, 2024

On 09-07-2024, the Securities and Exchange Board of India (‘SEBI’) notified the SEBI (Real Estate Investment Trusts) (Second Amendment) Regulations, 2024 (‘The Regulations’) to amend the SEBI (Real Estate Investment Trusts) Regulations, 2014. These Regulations came into force on 12-07-2024.

Key Points:

1. Regulation 2 has been modified to include the meaning of ‘employee unit option scheme’ and specify what all are included within the definition of ‘liquid asset’.

2. ‘Rights and Responsibilities of a Manager’ under Regulation 10 has been modified to offer unit-based employee benefit scheme for the employees based on REIT units upon discretion of the manager.

   Chapter IVA has been inserted which provides for the ‘Framework for Unit Based Employee Benefit Scheme’. It provides for the ‘nature and implementation of the scheme through trust’, the ‘manner of receiving units by the employee benefit trust’, the ‘manner of allotment of units to employee benefit trust by the REIT’, the ‘role of nomination and remuneration committee’, the ‘variation of terms of scheme’, and the ‘insider trading norms’ among other provisions.

3. Regulation 22 has been modified providing ‘Rights and meetings of unit holders’. New clauses have been included to include provisions related to the unit-based employee benefit scheme as well as approval by way of special resolution.

4. ‘Schedule X’ has been inserted which is divided into the following seven parts:

   • Part A — Provides for the minimum provisions in Trust Deed.

   • Part B — Provides for the terms and conditions of schemes to be formulated by the Nomination and Remuneration Committee.

   • Part C — Provides the contents of the explanatory statement to the notice and resolution for unit-holders meeting.

   • Part D — Provides the information required in the statement to be filed with recognized Stock Exchange(s). This part mentions the description of schemes, the documents to be filed with the registration statement, and undertakings.

   • Part E — Provides the format of notification for the issue of units.

   • Part F — Lists the disclosures in the annual report of the REIT.

   • Part G — provides the disclosure document which mentions the statement of risks, the information about the REIT, as well as the salient features of the scheme.