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The Securities and Exchange Board of India (Sebi) has imposed a penalty of INR 10 lakh on Axis Trustee Services Ltd for disclosure delays and governance lapses related to Embassy Office Parks REIT. The action follows a National Financial Reporting Authority (NFRA) order against the REIT manager’s former chief executive, which was not disclosed to unitholders for over 50 days despite being considered material information. Sebi observed that the trustee failed to act promptly and did not independently assess the ‘fit and proper person’ status of the executive as directed. Embassy Office Parks REIT, India’s first listed REIT, is managed by Embassy Office Parks Management Services Pvt Ltd and sponsored by Embassy Group and Blackstone. The regulator has emphasised the trustee’s responsibility in ensuring timely disclosures and compliance.
The Securities and Exchange Board of India (Sebi) has imposed a penalty of INR 10 lakh on Axis Trustee Services Limited for delays in disclosure and lapses in governance related to Embassy Office Parks REIT, following regulatory findings linked to the conduct of the REIT manager’s former chief executive. The order was issued earlier in the past week. Advertisement
The case arises from an order passed by the National Financial Reporting Authority in the past year, which found Aravind Maiya, then chief executive officer of Embassy Office Parks Management Services Pvt Ltd (EOPMSPL), guilty of professional misconduct. The authority had imposed a penalty of INR 50 lakh and barred him from undertaking audit-related functions for a period of ten years.
According to Sebi, Axis Trustee Services was informed of the NFRA order shortly after it was issued but disclosed the information to REIT unitholders only after a delay of 53 days. The regulator observed that the development constituted material information, as it had a bearing on the competence and integrity of a key managerial person associated with the REIT.
Sebi noted that while the primary responsibility for disclosures rests with the REIT manager, trustees are required to exercise independent oversight and ensure timely dissemination of material information. In this case, the regulator found that the trustee did not take adequate steps to address the delay or ensure immediate compliance.
Further, Sebi observed that Axis Trustee Services failed to independently assess whether the executive continued to meet the ‘fit and proper person’ criteria, despite a specific direction issued by the regulator. The omission was considered a breach of obligations under REIT regulations, which mandate trustees to safeguard investor interests through active supervision.
Embassy Office Parks REIT is managed by Embassy Office Parks Management Services Pvt Ltd and is sponsored by Embassy Group along with Blackstone Inc.. The REIT holds a portfolio of commercial office assets and was the first such listed vehicle in India’s real estate investment trust segment.
In a related interim order issued subsequently, Sebi had directed the REIT manager to suspend the chief executive and appoint an interim replacement. Following this, Ritwik Bhattacharjee was appointed interim chief executive, and was later succeeded by Amit Shetty in the role.
The regulator’s action underscores the importance of timely disclosures and governance standards within REIT structures, particularly given their role in managing investor capital and income-generating real estate assets.
The penalty imposed on Axis Trustee Services highlights the expectation that trustees maintain proactive oversight and ensure adherence to regulatory requirements, especially in matters involving senior management and material developments affecting investor confidence.
Source - PTI
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