Guidelines soon on real estate investment trusts: Sinha

Bijoy GhoshConsidering options UK Sinha, Chairman, SEBI, with T Shivaraman (left), President, MCCI, and Sunil Subramaniam, Deputy CEO, Sundaram AMC, at the 178th AGM of the Madras Chamber of Commerce and Industry, in Chennai on Thursday. BIJOY GHOSH
CHENNAI, JULY 24:  

Securities and Exchange Board of India (SEBI) will soon come out with guidelines for Real Estate Investment Trusts and Infrastructure Investment Trusts.

“I am hopeful that sometime in the next month SEBI will be coming out with its guidelines for Real Estate Investment Trusts and Infrastructure Investment Trusts. This will help the growth of the real estate industry and there will be a lot of activities in the direction of infrastructure development as well,” said U.K. Sinha, Chairman, SEBI.
The market regulator will also come out with a new set of guidelines for Employee Stock Option Plan (ESOP) in the next two weeks.

Delivering his special address at the 178{+t}{+h} Annual General Meeting of Madras Chamber of Commerce here, he said earlier SEBI had banned ESOP trust buying the company’s share from the secondary market and selling it. However, the new guidelines will relax the ban to the extent that ESOP Trusts will be allowed to buy the company’s shares from the secondary market to give them to employees. “Our impression at that time was that this will be used to manipulate the share price. Now we are going to allow them to buy and not sell, as issuance of fresh equity shares to give its employees, would dilute the holdings of the existing shareholders,”

Besides, SEBI is in the process of aligning some of its guidelines to those of Companies Act so that there is no confusion. Reacting to a complaint that corporates are often confused by differences between guidelines by Companies Act and SEBI, he said, “The legal position is very clear. The court itself had clarified that so far as the listed companies are concerned, if there is any difference between the Companies Act and SEBI regulations, SEBI regulations will prevail. So, I don’t think there is any scope of any confusion there.”

But, admitting that there is some amount of confusion when it comes to to-be-listed companies, he said those issues will be sorted out on the case-to-case basis according to their merits.

“However,” he added, “SEBI will try and align its guidelines, wherever possible, with the Companies Act.” For example, he said in the case of the tenure of independent directors, the Companies Act has had that if one is already an independent director, he/she can have two more 5-year terms. SEBI felt that it is not right and said one’s current tenure will also be counted and after that one can have only one term. “Now, after the Ministry of Corporate Affairs has clarified that your existing tenure will be counted only up to a period of one year and the rest will be counted as a fresh tenure, we feel this is a good move, and hence may align ours to that,” he explained.
Sebi to Issue Final Norms for REITs, Infra Trusts Soon – (online)
Press Trust of India | Updated On: July 25, 2014 00:32 (IST)

Chennai: The Securities and Exchange Board of India (Sebi) will issue final guidelines on newly-proposed real estate investment trusts and infrastructure investment trusts, as also revised norms for ESOPs by listed companies in coming weeks, Chairman U K Sinha said on Thursday.

Sebi has already announced draft regulations for REITs and InVITs, for which the government also proposed tax benefits during the union budget earlier this month. Besides, Sebi's board recently approved certain changes in ESOP (employee stock option) norms.

"You might have seen that in the current budget an announcement has been made about Real Estate Investment Trust. I am hopeful that sometime next month, SEBI will be coming out with (final) guidelines. My feeling is that these guidelines are going to help the growth of real estate industry," Mr Sinha said in his address at the 178th AGM of Madras Chamber of Commerce in Chennai.

He also said there is scope for aligning Sebi's corporate governance guidelines with that of the new companies law.

The Companies Act, 2013, many of whose provisions came into force in April this year, has strict norms to ensure good corporate governance practices in the country.

"There are some areas where there is scope of aligning the guidelines on corporate governance and the Companies Act (2013)," Mr Sinha said, while citing the example of independent directors' tenure, among others.

Apart from REITs, Mr Sinha said Sebi would also issue guidelines for the Infrastructure Investment Trusts (InVITs).

"We are also going to come out with guidelines for infrastructure investment trusts. My feeling is that sometime next month, SEBI is going to announce that," he said.

Sebi in 2012 had barred employee welfare schemes and trusts of listed entities from purchasing their own shares from the secondary market.

To a query on the guidelines for ESOP, he said, "But, we are going to release that ban to an extent that they can buy if they want to give ESOPs to their employees."

"Our earlier impression was this (share buying by welfare schemes and trusts) being used to manipulate and stabilise the share price and not actually to give it back to the employees. Now, we are going to allow them to buy, not the sale part," he said.

"ESOP guidelines may be out in next 15 days. It is in fairly advanced stage," he later told reporters.

Commenting about the proposal to implement self-regulatory organisation (SRO), he said, "The SRO matter has gone in to a legal battle and the matter is right now in the Securities Appellate Tribunal."

"Some people have challenged the process of selection. Only if there is final decision, can we discuss about it."

Spend time on compliance, SEBI chief tells India Inc
The HinduU.K. Sinha (right), President, SEBI, and T. Shivaraman, President, MCCI, at the 178th AGM of The Madras Chamber of Commerce and Industry in Chennai on Thursday. Photo: Bijoy Ghosh
Regulations are stricter in other countries

Market participants and companies often complain of high-handed regulation by the Securities and Exchange Board of India (SEBI), but the truth is that regulations and regulators abroad are stricter than in India, said Securities and Exchange Board of India Chairman U. K. Sinha.

Speaking at the 178th Annual General Meeting of the Madras Chamber of Commerce and Industry here on Thursday, Mr. Sinha said: “Earlier, SEBI was called as activist, now we are called dragon. Have we become a dragon?”

“Country after country is focusing on tightening regulation. Regulators feel that imposing a penalty on the company is not good enough as it only added to their cost of doing business. They now penalize key management personnel for violations,” Mr. Sinha said in a speech notable for its tone of plainspeak. Referring to threats from India Inc that investments will shift abroad if regulation becomes high-handed, he asked: “Regulations abroad are stricter than in India. Which regulatory jurisdiction will you go to?” He pointed out that compliance with SEBI regulations by companies still leaves a lot to be desired. “More than 1,100 companies are delinquent in complying with Clause 35 and 900 companies with Clause 49,” Mr. Sinha said adding that it was better to spend time on compliance than in defending violations later.

Referring to a case where the annual general meetings of four companies were finished in 15 minutes with all resolutions passed, Mr. Sinha said: “But, we don’t want that to happen. People will vote electronically. That’s why we want the shareholders to get the right to vote.”

The regulator also cautioned companies to be careful when it came to pricing IPOs. “In the last three years, two-thirds of companies that raised funds are now languishing below offer price. Then what sort of interest, you are expecting from the investors. You have to be careful what price and in what manner you have to raise capital. Raise capital on long term basis and investors’ interest has to be taken into account,” was Mr. Sinha’s advice to the firms.

REIT guidelines
The SEBI chief said that next month they would be coming out with guidelines on Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts that would help the retail investors and provide easier finance option to developers..
From activists to dragon, Sebi getting all names: Chairman
Press Trust of India  |  Chennai  
July 24, 2014 Last Updated at 19:58 IST

Taking a dig at those calling Sebi by names ranging from 'activist' to 'dragon', the regulatory authority's Chairman U K Sinha today said that corporates should actually fear activism and powers of their investors.

Addressing an industry event here today, Sinha said that the public activism has for long showing its impact on politics and a similar trend was now being seen in corporate world also, as shareholders have powers to vote on company proposals and these powers are being exercised.

"We were told that we (companies) are dealing with multiple regulators, multiple agencies and multiple bosses. That is a very generic complaint. It is a very fair point.

"... We (Sebi) have been blamed in the past to be an activist. In fact, they have blamed that Sebi has become a dragon", Sinha said at the 178th Annual General Meeting of Madras Chamber of Commerce.

Recently, a senior industry leader said Sebi was becoming like a dragon for the corporate world, while similar comments have been made in the past also including those accusing Sebi of acting like an activist.

"I would like to explain that whether we have acted like an dragon and if so, why?", he said, while adding that times have changed and people (shareholders) who have been remaining quiet in the past are wanting to be heard.

"Let us look at the world outside the corporate world for a short while. On matters of public concern, huge protests are being held. Normally, there have been students and unemployed youth doing such protests.

"What are we seeing today? We are seeing today -- young professionals, male and female, people who have their own job and feeling bad about some particular subject come out in millions across continents," he said, while referring to various protests in India and abroad in the recent past.

"Earlier, if you or somebody has been appointed as Chairman of a company or as a Mayor of a city, you are assured that you will be in that post for five years. Nobody used to challenge that. But today, people are being challenged and are being successfully removed," he said.

"People who were remaining quiet (earlier), are now wanting to be heard. Regimes have changed in completely unexpected manner and across the continents. If that is happening in our social and political life all over the world, how can the corporate world be away from that?" Sinha asked.

The Sebi Chairman, a former IAS officer from Bihar cadre, also recalled political events of 1970s in his home state.

"When that is the situation in politics, how can the corporate world be different. Today you have shareholder meetings and people will vote.
Sebi to issue final norms for REIT, infrastructure trusts soon, says U K Sinha
By PTI | 24 Jul, 2014,

CHENNAI: Capital markets regulator Sebi will issue final guidelines on newly proposed Real Estate Investment Trusts and Infrastructure Investment Trusts, as also revised norms for ESOPs by listed companies in coming weeks, Chairman U K Sinha said today.

Sebi has already announced draft regulations for REITs and InVITs, for which the government also proposed tax benefits during the union budget earlier this month. Besides, Sebi board recently approved certain changes in ESOP norms.

"You might have seen that in the current budget an announcement has been made about Real Estate Investment Trust. I am hopeful that sometime next month, SEBI will be coming out with (final) guidelines. My feeling is that these guidelines are going to help  the growth of real estate industry", Sinha said in his address at the 178th AGM of Madras Chamber of Commerce here.

Sinha also said there is scope for aligning Sebi's corporate governance guidelines with that of the new companies law.

The Companies Act, 2013, many of whose provisions came into force in April this year, has strict norms to ensure good corporate governance practices in the country.

"There are some areas where there is scope of aligning the guidelines on corporate governance and the Companies Act (2013)," Sinha said, while citing the example of independent directors' tenure, among others.

Apart from the Real Estate Investment Trusts (REITs), Sinha said Sebi would also issue guidelines for the Infrastructure Investment Trusts (InVITs).

"We are also going to come out with guidelines for infrastructure investment trusts. My feeling is that sometime next month, SEBI is going to announce that", he said.

Sebi in 2012 had barred employee welfare schemes and trusts of listed entities from purchasing their own shares from the secondary market.

To a query on the guidelines for ESOP (Employee Stock Option), he said, "But, we are going to release that ban to an extent that they can buy if they want to give ESOPs to their employees".

"Our earlier impression was this (share buying by welfare schemes and trusts) being used to manipulate and stabilise the share price and not actually to give it back to the employees. Now, we are going to allow them to buy, not the sale part", he said.

"ESOP guidelines may be out in next 15 days. It is in fairly advanced stage", he later told reporters.

Commenting about the proposal to implement self-regulatory organisation (SRO), Sinha said, "The SRO matter has gone in to a legal battle and the matter is right now in the Securities Appellate Tribunal".

"Some people have challenged the process of selection. Only if there is final decision, can we discuss about it," he said.
Norms on REITs, Infra Investment Trusts next month, says Sebi chief UK Sinha
Press Trust of India | Chennai | Published: Jul 25 2014, 00:39 IST

SUMMARYMarket regulator Securities and Exchange Board of India (Sebi) will unveil detailed guidelines on Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts next month, said Sebi chairman UK Sinha on Thursday.

Market regulator Securities and Exchange Board of India (Sebi) will unveil detailed guidelines on Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts next month, said Sebi chairman UK Sinha on Thursday.

Sinha, who was in Chennai to address the members of Madras Chambers of Commerce and Industry (MCCI) at its 178th AGM, said Sebi will also pursue aligning corporate governance guidelines with that of the Companies Act to see that investors/shareholders are protected in a major way. He said he was happy to hear the Union Cabinet passing the crucial Securities Laws (Amendment) Bill on Thursday and hoped the same will be passed in the Parliament session.

Sebi will come out with detailed guidelines for both REITs and Infra Investment Trusts during the next month, which would certainly see a lot of activities on both real estate as well infrastructure development fronts in the country. The Board will also come out with ESOP guidelines which would enable ESOP trusts to buy shares in the secondary market but will not be allowed to sell the same, Sinha said.

With the norms to be in place, REITs can not only enable real estate investors to raise and monetise their revenue-generating assets through listing, but also ensure protection to those investors, particularly small retail ones, from any untoward incidents. The norms will help Infrastructure Investment Trusts to help providing suitable structure for financing/refinancing in ongoing and other new infrastructure projects in a big way. “Both these norms would see a lot of activities on real estate as well infra front,” said Sinha.

Sinha said the Securities Laws (Amendment) Bill will empower the market regulator to not only crack down on ponzi schemes, but also those companies collecting unauthorised deposits in unscrupulous manner as well investment frauds.

It also gives Sebi sweeping powers like attachment of properties, launch of recovery proceedings, seeking call data records to investigate cases and ordering search and seizure against manipulators and fraudsters, he added.
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