Virtual Annual Meetings for InvITs, REITs allowed by SEBI

Prabhat Nigam

13 Sep, 2022

On 3rd June 2022, vide circular number SEBI/HO/DDHS/DDHS_Div2/P/CIR/2022/079, a Circular was issued by the Securities and Exchange Board of India (SEBI) wherein the facility of conducting the Virtual Annual Meetings for InvITs, REITs has been extended through VC or through OAVM. SEBI has extended this facility of conducting Virtual Annual Meetings for InvITs and REITs till 31st December 2022.  

What are InvITs and REITs?

Both InvITs (Infrastructure Investment Trusts) and REITs^[1] (Real Estate Investment Trusts) are investment instruments in the form of Trusts. The instrument of REIT comprises a portfolio of commercial real assets, the majority portion of which is leased out, which in turn becomes the source of earning. On the other hand, InvITs comprise of a portfolio of infrastructure assets such as power transmission lines, highways etc. Though the concept of REITs and InvITs is new, it is very much prevalent in the foreign market.

Who are the entities to whom the circular on Virtual Annual Meetings for InvITs and REITs are applicable?

The Circular on “Extension of facility for conducting annual meeting and other meetings of unitholders of REITs and InvITs through VC or through OAVM” is applicable to the following entities:

1. All Real Estate Investment Trusts (“REITs”)
2. All Infrastructure Investment Trusts (“InvITs”)
3. All the parties related to REITs and InvITs
4. All Recognised Stock Exchanges

Highlights of the Circular on SEBI allowing Virtual Annual Meetings for InvITs, REITs   

Background

Taking into consideration the physical restrictions in place in response to combat the pandemic, SEBI, through its Circular number SEBI/HO/DDHS/DDHS/CIR/P/2020/102 released on 22nd June 2020, read with another circular number SEBI/HO/DDHS/DDHS/CIR/P/2020/201 released on 8th October 2020, permitted to conduct a virtual annual meeting for InvITs and REITs and other meetings of unit holders through the means of Video Conferencing or Other Audio and Visual Means up to the sate the date of 31st December 2020.

SEBI, through another Circular number SEBI/HO/DDHS/DDHS/CIR/P/2021/21 released on 26th February 2021, extended the facility of conducting virtual annual meetings for InvITs and REITs till 31st December 2021 and other meetings of unit holders through video conferencing or other audio and visual means till 30th June 2021.

Another circular was released by SEBI on 22^nd December 2021 with Circular number SEBI/HO/DDHS/DDHS_Div2/P/CIR/2021/697, where another extension of the facility of conducting the virtual annual meetings for InvITs and REITs and other meetings with the unit holders through video conferencing and other audio and visual means was extended till the date of 30^th June 2022.   

SEBI further extends the facility of virtual annual meetings for InvITs and REITs

SEBI had received representations from the stakeholders of the REITs and InvITs asking for a further extension of the said facility of conducting virtual annual meeting for InvITs and REITs through video conferencing and other audio and visual means.

SEBI also took into account the fact the Ministry of Corporate Affairs (MCA) through a circular dated 5^th May 2022 has already extended the facility of holding the Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) through Video Conferencing and other Audio and Visual means till 31^st December 2022.

Accordingly, SEBI has decided to extend the facility to conduct virtual annual meetings for InvITs and REITs of the unit holders in accordance with Reg. 22(3) of SEBI (REIT) Regulations, 2014 and Reg. 22(3)(a) of SEBI (InvIT) Regulations, 2014. Further, the meetings other than annual meetings shall be conducted through the mode of video conferencing and other audio and visual means till the date of 31^st December 2022.

Procedure to be followed while conducting virtual meetings  

Both the REITs and InvITs have been asked to comply with the procedure laid down by SEBI in Annexure-I of SEBI Circular number SEBI/HO/DDHS/DDHS/CIR/P/2020/102 which was released on 22^nd June 2020.

Apart from other requirements, the recorded transcripts of the meetings held through the mode of video conferencing and other audio visual means has to be kept in the safe custody of the investment managers of the InvIT or the managers of REIT.

Additionally, both the InvITs and REITs are required to upload the transcripts on their respective websites as soon as possible after the conclusion of the said meetings.    

Additional things to be complied with

Before scheduling such meetings, the convenience of different persons living in different time zones has to be kept in mind. As per the requirements laid down by SEBI, the facility of remote e-voting also needs to be provided before the actual date of meeting.      

Date of Extension

Taking into consideration the demands from the stakeholders of REITs and InvITs, SEBI has extended the facility of conducting virtual annual meetings for InvITs and REITs till 31^st December 2022.  

Conclusion

This Circular on extension of the facility of conducting virtual annual meetings for InvITs and REITs has been issued after exercising the powers conferred on the SEBI under section 11(1) of the SEBI Act, 1992 read with Reg. 33 of the SEBI (REIT) Regulations, 2014 and Reg. 33 of SEBI (InvIT) Regulations, 2014.

Read our Article:How will the budget affect InvITS and REITs?