New governance norms for trusts


The Securities and Exchange Board of India (SEBI) has announced governance norms for real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), in line with those for listed companies. It follows the board’s approval of the concept in December.

According to the regulator, an auditor will now serve until the fifth annual general meeting of unit holders, and REITs or InvITs will not appoint an individual auditor for more than one term of five consecutive years, or an audit firm for more than two terms.

Overnight mutual fund investments by these vehicles will now be considered as cash and cash equivalent for computing leverage, and any unclaimed or unpaid distributions will be transferred to the SEBI’s investor protection and education fund.

In addition, the SEBI amended certain provisions of the Listing Obligations and Disclosure Requirements Regulations that are not directly applicable or already specified for REITs and InvITs under respective regulations.

Furthermore, boards of REITs or InvITs must have at least six directors, including one woman independent director, and must create a vigil mechanism that includes a whistleblower policy for directors and employees.