UNIT HOLDERS’ NOMINEE DIRECTOR UNDER SEBI (REIT) REGULATIONS, 2014

[Mr. M. GOVINDARAJAN]

The first proviso to 4(2)(g) provides that the unitholders holding not less than 10% of the total outstanding units of the REIT, either individually or collectively, shall be entitled to nominate one director on the board of directors of the Manager, in the manner as may be specified by the Board.

Unitholder Nominee Director shall be a non-independent director nominated by Eligible Unitholder(s) on the Board of Directors of the Manager.

Eligibility

The candidates proposed to be considered for appointment as Unitholder Nominee Directors shall fulfill the following requirements-

• The person should be ‘fit and proper’ person;
• The person is not a willful defaulter or fraudulent borrower, or a promoter or director or person in control of a company or entity categorized as such by any bank or financial institution in accordance with the guidelines prescribed by the Reserve Bank of India;
• He shall not be disqualified and is not debarred from acting as a director or member of management by any court, regulatory or supervisory authority;
• The person is not debarred from accessing the capital markets by the Board or any other authority;
• The person is not or has not been a promoter or director or person in control of any company or entity which has been debarred from accessing the capital markets by the Board or any other authority.

Condition for nomination

The eligible Unitholder(s) shall have the right, but not the obligation, to nominate any person for appointment as Unitholder Nominee Director.  The unitholders shall be entitled to nominate only one Unitholder Nominee Director, subject to the unitholding of such Eligible Unitholder(s) exceeding the specified threshold.

If the unitholding of more than one unitholder is aggregated for the purpose of qualifying as Eligible Unitholder(s) to exercise the right to nominate a Unitholder Nominee Director, then 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 in relation to the qualifications and criteria for appointment and evaluation parameters of individuals nominated for Unitholder Nominee Director which shall be made available in the website of REIT. The said policy shall indicate-

• Remuneration/sitting fees of the nominee director;
• Process of removal or resignation of the nominee director;
• The role and responsibilities of the Board and/or Nomination and Remuneration Committee;
• Unitholder Nominee Directors shall recuse themselves from voting on any transaction where either such director, such director’s associates or the Eligible Unitholder(s) who nominated him / her or associate of such Eligible Unitholder(s) is a party.

First time nomination

The Manager shall send a written intimation to all unitholders on their email address(es) registered either with the Manager or with any depository, within 10 days from the end of September 30, 2023, requesting them to inform the Manager if any Eligible Unitholder(s) wish to exercise the right to nominate a Unitholder Nominee Director.

Eligible Unitholder(s) who wish to exercise this right shall inform the Manager through a written notice within 10 days of receipt of the intimation from the Manager. The Eligible Unitholder(s) shall be reckoned based on the unitholding pattern as on September 30, 2023.  The following details shall be given-

• name of the candidate;
• DIN of the candidate;
• a brief profile of the candidate, including age, educational qualifications, professional qualifications, nationality, occupation, address, experience in the sector and sub-sector in which the REIT operates and directorship in other entities, together with back-up documents;
• details of any outstanding criminal action, regulatory action or material civil litigation against the candidate
• details required under The Companies Act, 2013 to facilitate the Manager for filing of Form DIR-12
• confirmations in relation to eligibility of the candidate. 

If multiple unitholders are aggregating their unitholding for the purpose of nomination right then such notice shall also identify up to two unitholders as authorized representative of the group of Eligible Unitholder(s). Any communication by such authorized representatives to the Manager for the purpose of such nomination shall be deemed to be on behalf of, and representative of the interests of, the entire group of Eligible Unitholder(s).

Such communication shall also set out the names, demat account details and unitholding of the Eligible Unitholder(s). The same shall also contain a specific acknowledgement from the Eligible Unitholder(s) that their unitholding shall be maintained at least 10% of the total outstanding units of the REIT, failing which they shall lose the right to have their Unitholder Nominee Director on the Board of Directors of the Manager.

The eligibility of a Unitholder Nominee Director shall be confirmed by the Manager, based on the evaluation done by the Nomination and Remuneration Committee and/or the Board of Directors of the Manager in line with the policy formulated in this regard, within 10 days of receipt of notice from Eligible Unitholder(s).

Once the eligibility of the nominee director is confirmed the Board shall appoint the said person as nominee director within 30 days from the date of such confirmation.  The Manager shall ensure that the appointment of the Unitholder Nominee Director is in compliance with the requirements with respect to the composition of the Board of Directors under the REIT Regulations and other applicable laws.

If the candidate is not found eligible then the same shall be informed to the Unitholders by the Manager with the reasons for the same within 10 days from the date of receipt of notice from the Unit holders.  In such circumstances the Unit holders may submit another candidate within a period of 10 days from the date of receipt of information from the Manager.

Subsequent nomination

The Manager shall send a written intimation to all unitholders on their email address(es) registered either with the Manager or with any depository, within ten days from the end of each financial year, requesting them to inform the Manager if any Eligible Unitholder(s) wish to exercise the right to nominate a Unitholder Nominee Director.

The eligible Unitholder(s) shall inform the Manager through a written notice within ten days of receipt of the intimation from the Manager. The Eligible Unitholder(s) shall be reckoned based on the unitholding pattern of the REIT as on March 31st of the financial year.  If any unitholder(s) acquires/holds units of the prescribed threshold of 10% unitholding or more during a particular financial year, then such unitholder(s) shall be entitled to exercise the nomination right only in the following financial year.

Change in nomination

If an Eligible Unitholder or a group of Eligible Unitholders propose to change a Unitholder Nominee Director who has been appointed on the Board of Directors of the Manager, then such Eligible Unitholder(s), or their authorized representatives, shall inform the Manager of the proposed candidate. The Manager shall evaluate the proposed candidate.

Withdrawal of the nomination

If an Eligible Unitholder or a group of Eligible Unitholders propose to withdraw their nomination for the Unitholder Nominee Director that has been appointed on the Board of Directors of the Manager, then such Eligible Unitholder(s), or their authorized representatives, shall inform the Manager and the Unitholder Nominee Director of the same, and the Unitholder Nominee Director shall resign / step down from the Board of Directors of the Manager forthwith.

Vacation of office

If the unit holding of the Unit holders falls below 10%, then the same shall  be intimated to the Manager within 2 days of such change.  The Unit holder nominee director shall resign from the Board of Directors of the Manager within 2 days of such change.

If the unit holding of the Unit holders falls below 10% on account of issue of fresh units by REIT, then the unit holder shall information such change to the Manager within 2 working days of such change.  The nominee director shall resign from the Board within 2 days of such change.

In case of death of nominee director or due his permanent incapacity to act as the Director, then the Unit holders may propose another eligible person for this post.

The Board of Directors, including the Nomination and Remuneration Committee shall have the powers to remove a Nominee Director after recording the reasons for the same.

Amendment of Trust deed

the trust deed and investment management agreement shall stand amended or be deemed to incorporate provisions to provide board nomination rights to Eligible Unitholder(s) in the manner specified above.  The trustee and the Manager shall, within a period of six months from the date of this circular, ensure that the trust deed and the investment management agreement of the REIT are amended to provide for nomination and appointment of Unitholder Nominee Directors on the Board of Directors of the Manager by Eligible Unitholder(s).

Review

The Manager of the REIT shall, within 10 days from the end of each calendar month, review whether the Eligible Unitholder(s) who have exercised the board nomination right, continue to have/hold the required number of units of REIT and make a report of the same. The Manager of the REIT shall submit such report to the Trustee of the REIT.  On review by the Manager, if it is found that Eligible Unitholder(s) do not have/hold the required number of units, then the Manager shall inform the same to the Trustee, such unitholder(s) and the Unitholder Nominee Director. The Manager and such Unitholder(s) shall require the relevant Unitholder Nominee Director nominated by such Unitholder(s) to resign / step down from the Board of Directors of the Manager forthwith and such Unitholder Nominee Director shall accordingly resign / step down from the board.