Guidelines soon on real estate investment trusts: Sinha

Our Bureau Chennai | Updated on November 25, 2017 Published on July 24, 2014

Considering options UK Sinha, Chairman, SEBI, with T Shivaraman (left),President, MCCI, and Sunil Subramaniam, Deputy CEO, Sundaram AMC, atthe 178th AGM of the Madras Chamber of Commerce and Industry, in Chennai on Thursday. BIJOY GHOSH   -  Bijoy Ghosh

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.

Published on July 24, 2014

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