The Securities and Exchange Board of India (SEBI) issued a new framework for a unit-based employment benefit scheme for the Real Estate Investment Trusts and Infrastructure Investment Trusts (REITs and InvITs). The regulator issued notifications and informed the implementation process of the scheme via a trust, along with details about the receiving units by the employee benefit trust and the way of allotment of the units to the trust by the REITs and InvITs.
Issuing the official notifications, the capital markets regulator said that the unit-based employee scheme would be in the form of the employee unit option scheme. The scheme will provide the investment manager with the option to allocate unit options to the employees via an employee benefit trust, reported PTI.
The scheme would be implemented via a separate employee benefit trust (EB Trust) and a REIT or InvIT manager will have the option of creating the said trust. The units of the EB Trust would be utilised strictly for distributing unit-based employee benefits.
The regulator noted that the investment manager can receive REIT/InvIT units as an alternative to management fees for distributing unit-based employee benefits. The trust would not be permitted to transfer or sell any units of the REIT/InvIT held by it apart from providing unit-based benefits to the manager or their employees.
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The trustee of the said trust would not be allowed to vote on the basis of the units of the investment trusts held by the body. These new norms for the REITs and InvITs came into effect from July 12, 2024.
Notably, these investment trusts became popular in India recently as they allow investors to capitalise on the returns from real estate or infrastructure investments. REITs allow investors to pour funds in commercial real estate options, while the InvIT provides the option of investing in a portfolio of infrastructure assets.