On August 22, 2024, the Securities and Exchange Board of India (SEBI) issued two significant circulars—SEBI/HO/DDHS/DDHS-PoD-2/P/CIR/2024/114 and SEBI/HO/DDHS/DDHS-PoD-2/P/CIR/2024/115—marking updates to the regulatory frameworks governing Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) respectively. These updates amend the Master Circulars for InvITs and REITs dated May 15, 2024, focusing on the review of investor complaints and the timeline for the disclosure of deviations.
Key Amendments
1. Review of Statement of Investor Complaints
Previously, the Master Circulars required that all investor complaints, including those submitted through the SEBI Complaints Redress System (SCORES), be disclosed on the InvITs' or REITs' websites and filed with recognized stock exchanges within 21 days from the end of the financial year or quarter. Moreover, the Board of Directors or Governing Body of the Investment Manager was mandated to review these statements before submission to the stock exchanges.
New Amendment:
The revised regulations now stipulate that the review of the statement of investor complaints by the Board of Directors or Governing Body is no longer required prior to submission to the stock exchanges. Instead, the statements should be placed before the Board on a quarterly basis for review. This change aligns with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations), which do not necessitate prior review before submission.
2. Timeline for Disclosure of Statement of Deviations
The original Master Circulars required that statements regarding deviations in the use of proceeds from stated objects be submitted to the stock exchanges within 21 days from the end of each quarter. These statements also needed to be reviewed by the Trustee and the Board of Directors or Governing Body before submission.
New Amendment:
The updated regulations align the disclosure timeline with the LODR Regulations by allowing the statement of deviations to be submitted along with the financial results. This means that instead of a separate 21-day deadline, the deviation statements are now submitted as part of the quarterly financial results submission. This change aims to streamline reporting processes and reduce administrative burdens.
Implications for InvITs and REITs
These amendments are expected to:
· Simplify Compliance: By removing the requirement for prior review of complaints and deviations, SEBI is making it easier for InvITs and REITs to comply with disclosure regulations without redundant procedures.
· Enhance Efficiency: Aligning disclosure requirements with the LODR Regulations should help synchronize reporting practices across different types of entities, improving overall efficiency and clarity.
· Promote Transparency: While the prior review is no longer required, placing the statements before the Board on a quarterly basis ensures continued oversight and accountability in handling investor complaints and deviations.
Conclusion
SEBI's recent circulars represent a move towards streamlined regulatory compliance for InvITs and REITs. By revising the requirements for the review and disclosure of investor complaints and deviations, SEBI aims to enhance operational efficiency while maintaining transparency and accountability in financial reporting. These updates are effective immediately and underscore SEBI’s commitment to refining regulatory practices to better serve market participants and investors.
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