TaxTMI 
TaxTMI 
Securities and Exchange Board of India (Real Estate Investment Trusts) (Second Amendment) Regulations, 2024
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....bsp; i. after clause (l), the following new clause shall be inserted, namely, ─ "(la) "employee unit option scheme" means a scheme under which the manager grants unit options to its employees through an employee benefit trust. Explanation. - For the above purpose, employees of the manager shall include all directors of the manager except independent directors." ii. after clause (t), the following new clause shall be inserted: "(ta) "liquid asset" means cash, units of overnight or liquid mutual fund schemes, fixed deposits of scheduled commercial banks, government securities, treasury bills, repo on government securities and repo on corporate bonds." II. in regulation 10, after sub-regulation (29), the following new sub-regulation shall be inserted, namely,- " (30) The manager may at its discretion, offer unit based employee benefit scheme for its employees based on the units of the REIT subject to compliance with the provisions of Chapter IVA of these regulations." III. after chapter IV and before chapter V, the following shall be inserted: "CHAPTER IVA FRAMEWORK ....
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.... may transfer full or part of the units of REIT held by it to the employee benefit trust; Explanation. - For the purpose of clauses (b) and (c), any transfer of units to the employee benefit trust shall be irrevocable and without any consideration in return i.e. shall constitute a gift to the employee benefit trust. (2) Subordinate units shall not be eligible for being transferred to the employee benefit trust or being made part of a unit based employee benefit scheme. (3) The cash accumulated by the employee benefit trust on account of distributions received on units of the REIT held by such trust, income earned on the assets held by the employee benefit trust and receipt of exercise price from the employees of the manager on exercise of options, may be used by the employee benefit trust for acquiring units of the REIT either from the secondary market or during any fresh issuance of units by the REIT only for the purpose of using such units for unit based employee benefit scheme. (4) The employee benefit trust may subscribe to the units of the REIT subject to compliance with the minimum lot for primary market transaction specified under these re....
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....loyee benefit trust plans to undertake secondary acquisition, as disclosed to the recognised stock exchanges and depositories has elapsed. Manner of allotment of units to the employee benefit trust by the REIT. 17E. (1) A manager of any REIT that allots units to the employee benefit trust in lieu of management fees shall ensure the following: (a) obtaining the approval of unitholders as per sub-regulation (6) of regulation 22 of these regulations before issuance of units to the employee benefit trust; (b) issuance of units to the employee benefit trust only once in a financial year, within ninety days after the completion of the annual valuation exercise; (c) issuance of units to the employee benefit trust in compliance with the guidelines for preferential issue of units specified by the Board; (d) allotting such units of REIT directly to the employee benefit trust so that these units are used exclusively for unit based employee benefit scheme. Role of nomination and remuneration committee. 17F. (1) The nomination and remuneration committee of the manager shall be responsible for the adm....
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.... shall ensure that such repricing is not detrimental to the interests of the employees and approval of the unitholders has been obtained for such repricing as per sub-regulation (6) of regulation 22. Listing. 17H. (1) In case a new issue of units is made under any unit based employee benefit scheme, units so issued shall be listed immediately on all recognised stock exchange(s) where the existing units are listed, subject to the following conditions: (a) The scheme is in compliance with these regulations; (b) A statement, as specified in Part D of Schedule X of these regulations, is filed and the manager obtains an in-principle approval from the recognised stock exchange(s); (c) As and when an exercise is made, the manager notifies the concerned recognised stock exchange(s) as per the statement as specified in Part E of Schedule X of these regulations. Trustee of the employee benefit trust. 17I. (1) The trustee of the employee benefit trust shall be a trustee registered with the Board under the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993. (2) The t....
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....xtend beyond the end of the subsequent financial year, or the second subsequent financial year: Provided that the extension upto the second subsequent financial year shall be subject to the approval of the nomination and remuneration committee of the manager. (6) No unit based employee benefit scheme shall be offered unless the disclosures as specified in Part G of Schedule X of these regulations are made by the manager to the prospective option grantees. (7) The manager implementing unit based employee benefit scheme shall follow the requirements including the disclosure requirements of the Accounting Standards prescribed by the Central Government in terms of section 133 of the Companies Act, 2013 including any 'Guidance Note on Accounting for employee share-based Payments' issued in that regard from time to time. (8) The manager granting options to its employees pursuant to a unit based employee benefit scheme shall be free to determine the exercise price subject to conforming to the accounting policies specified in sub-regulation (7) of this regulation. (9) The manager shall ensure that the explanatory statement to the n....
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....al shall mention the percentage of secondary acquisition that could be undertaken subject to the limits specified under regulation 17D; (k) issuance of units to the employee benefit trust as specified in clause (a) of sub-regulation (1) of regulation 17C; (l) transfer of units to the employee benefit trust as specified in clauses (b) and (c) of sub-regulation (1) of regulation 17C; (m) approval by way of a separate resolution shall be required for grant of options to identified employees, during any one year, equal to or exceeding one per cent. of the unit capital of the REIT at the time of grant of options; (n) variation of the terms of the unit based employee benefit scheme including repricing of the options;" V. in regulation 26H, the Explanation under clause (b) shall be omitted. VI. After schedule IX, the following new schedule shall be inserted, - "Schedule - X Part A - Minimum Provisions in Trust Deed [See regulation 17B (4)] The trust deed shall, inter alia, provide the following: 1. Details of the trust, including: (i) Name of the trust; (ii) Object of the trust; (iii) Details of settlor; ....
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....sp; entitlement including adjustment to the number of options and to the exercise price in case of any corporate actions. In this regard, the following shall, inter alia, be taken into consideration by the nomination and remuneration committee: i. the number and price of options shall be adjusted in a manner such that total value to the employee of the options remains the same after the corporate action; ii. the vesting period and the life of the options shall be left unaltered as far as possible to protect the rights of the employee(s) who is granted such options; g. the grant, vesting and exercise of options in case of employees who are on long leave; and h. the procedure for funding the exercise of options Part C -Contents of the explanatory statement to the notice and resolution for unitholders meeting [See regulations 17G(4) and 17K(9)] The explanatory statement to the notice and....
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....es of persons eligible under the scheme: (a) Employees, (b) employees outside India, (c) directors, except independent directors. 8. Total number of units reserved under the scheme, as applicable. 9. Number of units entitled under the grant. 10. Total number of grants to be made. 11. Maximum number of options to be granted per employee per grant and in aggregate. 12. Exercise price or pricing formula. 13. Whether any amount is payable at the time of grant? If so, quantum of such amount. 14. Lock-in period under the scheme. 15. Vesting period under the scheme. 16. Maximum period within which the grant shall be vested. 17. Exercise period under the scheme. 18. Whether employee can exercise all the options vested at one time? Yes/No 19. Whether employee can exercise vested options at various points of time within the exercise period? Yes/No 20. Whether scheme provides for the procedure for making a fair and reasonable adjustment to the number of options and to the exercise price in case of any corporate actions? Clause in scheme describing such adjustment. 21. Description of the appraisal process for determinin....
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.... 5. Copy of latest Annual Report of the REIT. 6. Certificate of Secretarial Auditor on compliance with these regulations. 7. Specimen copy of unit certificate, if applicable. 8. Any other relevant documents. Undertakings The undersigned investment manager hereby undertakes: 1. To file, a post-effective amendment to this statement to include any material information with respect to the scheme of distribution not previously disclosed in the statement or any material change to such information in the statement. 2. To notify, the concerned recognised stock exchanges on which the units of the REIT are listed, of each issue of units pursuant to the exercise of options under the scheme mentioned in this statement, in the specified form, as amended from time to time. 3. That the investment manager shall conform to the accounting policies specified in regulation 17K(7) of the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 4. That the scheme confirms to the Securities and Exchange Board of India (R....
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....manager in the annual report of the REIT shall disclose any material change in the scheme(s) and whether the scheme(s) is / are in compliance with the regulations. Further, the following details, inter alia, shall be disclosed on the REIT's website and a web-link thereto shall be provided in the annual report. A. Relevant disclosures in terms of the accounting standards prescribed by the Central Government in terms of section 133 of the Companies Act, 2013 (18 of 2013) including the 'Guidance note on accounting for employee share-based payments' issued in that regard from time to time. B. Details related to Unit Option Scheme (i) A description of each unit option scheme that existed at any time during the year, including the general terms and conditions of each unit option scheme, including - (a) Date of unitholders' approval (b) Total number of options approved under unit option scheme (c) Vesting requirements (d) Exercise price or pricing formula (e) Maximum term of options granted (f) Source of units (primary, secondary, gift or combination) (g) Variation in....
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....ow any other features of the options granted were incorporated into the measurement of fair value, such as a market condition. C. Details related to Trust (i) The following details, inter alia, in connection with transactions made by the Trust meant for the purpose of administering the schemes under the regulations are to be disclosed: (ii) General information on all schemes Sl. No. Particulars Details 1. Name of the Trust 2. Details of the Trustee 3. Any other contribution made to the Trust during the year (iii) Brief details of transactions in units by the Trust (a) Number of units held at the beginning of the year; (b) Number of units acquired during the year through (i) primary issuance (ii) secondary acquisition, also as a percentage of unit capital as at the end of the previous financial year, along with information on weighted average cost of acquisition per unit; (c) Number of units transferred to the employees; (d) Number of units held at the end of th....
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.... the manager including the conditions regarding vesting, exercise, adjustment for corporate actions, and forfeiture of vested options. It shall not be necessary to include this Part if it has already been provided to the employee in connection with a previous grant and no changes have taken place in the scheme since then. If the scheme administrator provides advisory services to the grantees in connection with the exercise of options or sale of resulting units, such advice shall be accompanied by an appropriate disclosure of concentration and other risks. The scheme administrator shall conform to the code of conduct appropriate for such fiduciary relationships." BABITHA RAYUDU, Executive Director [ADVT.-III/4/Exty./285/2024-25] Footnotes: 1. The Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 was published in the Gazette of India on September 26, 2014 vide No. LAD-NRO/GN/2014/15/11/1576. 2. The Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 was subsequently amended by the - a) Securities and Exchange Board of India (Real Estate Investment Trusts) (Amendment) Regula....