SEBI Eases REITs, InVITs Nomination Rules

On 5th August, 2024, SEBI revised its framework on the nomination rights of unitholders in real estate investment trusts (REITs) and infrastructure investment trusts (InVITs) to simplify the process of appointing directors.

SEBI has updated the rules to facilitate easier nomination of directors by unitholders of REITs and InVITs.
Previously, unitholders exceeding a specified ownership threshold could nominate a director only if they did not hold similar rights as shareholders or lenders.
The new exception allows unitholders to appoint directors even if they also hold nomination rights due to conditions specified in the Sebi (Debenture Trustees) Regulations, 1993.
This regulatory change responds to market participants' requests for clearer guidelines on director nominations for REITs and InVITs.
The updated rules apply immediately following the issuance of two new circulars by Sebi.
REITs enable investment in commercial real estate, while InVITs offer opportunities to invest in infrastructure assets.
The new framework is intended to promote ease of doing business and streamline governance structures in these investment vehicles.