RIGHTS AND RESPONSIBILITIES OF PARTIES TO THE REIT, VALUER AND AUDITOR

RIGHTS AND RESPONSIBILITIES OF PARTIES TO THE REIT, VALUER AND AUDITOR :

RIGHTS AND RESPONSIBILITIES OF TRUSTEE

Regulation 9 prescribed the rights and responsibilities of a Trustee of a REIT. These are the discuss below:-

1. The Trustee shall hold the REIT assets in trust for the benefit of the unit holders.

2. The Trustee shall enter into an investment management agreement with the manager on behalf of the REIT.

3. The trustee shall oversee activities of the manager in the interest of the unit holders, and shall obtain compliance certificate from the manager in the form as may be specified on a quarterly basis.

4. The trustee shall ensure that the manager complies with the reporting and disclosures requirements in these regulations and in case of any delay or discrepancy, require the manager to rectify the same on an urgent basis.

5. The trustee shall review the transactions carried out between the manager and its associates and where the manager has advised that there may be a conflict of interest, shall obtain confirmation from a practising chartered accountant that such transaction is on arm’s length basis.

6. The trustee shall periodically review the status of unit holders’ complaints and their redressal undertaken
by the manager.

7. The trustee shall make distributions and ensure that the manager makes timely declaration of distributions to the unit holders.

8. The trustee may require the manager to set up such systems and submit such reports to the trustees, as may be necessary for effective monitoring of the performance and functioning of the REIT.

9. The trustee shall ensure that subscription amount is kept in a separate bank account in name of the REIT and is only utilized for adjustment against allotment of units or refund of money to the applicants till the time such units are listed.

10. The trustee shall ensure that the remuneration of the valuer is not linked to or based on the value of the asset being valued.

11. The trustee shall ensure that the manager convenes meetings of the unit holders in accordance with
these regulations and oversee the voting by unit holders and declare outcome of the voting.

12. The trustee may take up with SEBI or with the designated stock exchange, any matter which has been approved in an annual meeting or special meeting, if the matter requires such action.

13. The trustee shall obtain prior approval from the unit holders in accordance with these regulation and
from SEBI in case of change in control of the manager.

14. The trustee and its associates shall not invest in units of the REIT in which it is designated as the trustee.

15. The trustee shall ensure that the activity of the REIT is being operated in accordance with the provisions of the trust deed, the offer document and if any discrepancy is noticed, shall inform the same to SEBI immediately in writing.

16. The trustee shall provide to SEBI and to the designated stock exchange such information as may be sought by SEBI or by the designated stock exchange pertaining to the activity of the REIT.

17. The trustee shall immediately inform to SEBI in case any act which is detrimental to the interest of the unit holders is noted.

RIGHTS AND RESPONSIBILITIES OF MANAGER

Regulation 10 provides for the rights and responsibilities of a Manager of a REIT. Which as followings:-

1. The manager shall make the investment decisions with respect to the underlying assets of the REIT including any further investment or divestment of the assets.

2. The manager shall ensure that the real estate assets of the REIT or SPV have proper legal and marketable titles and that all the material contracts including rental or lease agreements entered into on behalf of REITs or SPV are legal, valid, binding and enforceable by and on behalf of the REIT or SPV.

3. The manager shall ensure that the investments made by the REIT are in accordance with the investment conditions specified in these regulation.

4. The manager shall undertake management of the REIT assets including lease management, maintenance of the assets, regular structural audits, regular safety audits, etc. either directly or through the appointment and supervision of appropriate agents.

5. The manager, in consultation with trustee, shall appoint the valuer(s), auditor, registrar and transfer agent, merchant banker, custodian and any other intermediary or service provider or agent for managing the assets of the REIT or for offer and listing of its units or any other activity pertaining to the REIT in a timely manner.

6. The manager shall appoint an auditor for a period of not more than five consecutive years.

However, the auditor, not being an individual, may be reappointed for a period of another five consecutive years, subject to approval of unit-holders in the annual meeting.

7. The manager shall arrange for adequate insurance coverage for the real estate assets of the REIT.

However, in case of assets held by SPV, the manager shall ensure that real estate assets are adequately insured.

8. If the REIT invests in under-construction properties as per these regulations, the manager-

(a) may undertake the development of the properties, either directly or through the SPV, or appoint any other person for development of such properties; and

(b) shall oversee the progress of development, approval status and other aspects of the properties up to its completion.

9. The manager shall ensure that it has adequate infrastructure and sufficient key personnel with adequate experience and qualification to undertake management of the REIT at all times.

10. The manager shall be responsible for,- (a) filing the draft and final offer document with SEBI and the designated stock exchange.

(b) obtaining in-principle approval from the designated stock exchange;

11. The manager shall ensure that disclosures made in the offer document or any other document as may be specified by SEBI contain material, true, correct and adequate disclosures in accordance with these regulations and guidelines or circulars issued by SEBI.

12. The manager shall declare distributions to the unit holders in accordance with these regulation.

13. The manager shall ensure adequate and timely redressal of all unit holders’ grievances pertaining to activities of the REIT.

14. The manager shall ensure that the disclosures to the unit holders, SEBI, trustees and designated stock exchange are adequate, timely in accordance with these regulations.

15. The manager shall provide to SEBI and to the designated stock exchanges any such information as may be sought by SEBI or the designated stock exchange pertaining to the activities of the REIT.

16. The manager shall ensure that adequate controls are in place to ensure segregation of its activity as manager of the REIT from its other activities.

17. The manager or its associates shall not obtain any commission or rebate or any other remuneration, by
whatever name called, arising out of transactions pertaining to the REIT other than as specified in the offer document or any other document as may be specified by SEBI for the purpose of issue of units.

18. The manager shall submit to the trustee,-

(a) quarterly reports on the activities of the REIT including receipts for all funds received by it and for all payments made, position on compliance with these regulations, specifically including compliance with investment conditions, related party transactions and borrowings and deferred payments, performance report, status of development of under-construction properties, within 30 days of end of such quarter;

(b) valuation reports within 15 days of the receipt of the valuation report from the valuer;

(c) decision to acquire or sell or develop any property or expand existing completed properties along with rationale for the same;

(d) details of any action which requires approval from the unit holders as required under these regulations;

(e) details of any other material fact including change of its directors, any legal proceedings that may have a significant bearing on the activity of the REIT within 7 working days of such action.

19. In case the manager fails to timely submit to the trustee information or reports as specified, the trustee
shall intimate the same to SEBI.

20. The manager shall coordinate with trustee, as may be necessary, with respect to operations of the REIT.

21. The manager shall ensure that the valuation of the REIT assets is done by the valuer(s) in accordance with these regulations.

22. The manager shall ensure that computation of NAV of the REIT is based on the valuation done by the valuer and is declared no later than 15 days from the date of valuation and such computation shall be done and declared not less than once every 6 months.

23. The manager shall ensure that the audit of accounts of the REIT by the auditor is done not less than twice annually and such report is submitted to the designated stock exchange within 45 days of end of such financial year ending March 31st and half-year ending on September 30th.

24. The manager may appoint a custodian in order to provide such custodial services as may be authorised by the trustees and oversee activities of such custodian.

25. The manager shall place, before its board of directors in the case of a company or the governing board in case of an LLP, a report on activity and performance of the REIT every three months.

26. The manager shall designate an employee or director as the compliance officer for monitoring of compliance with these regulations and circulars issued thereunder and intimating SEBI in case of any violation.

27. The manager shall convene meetings of the unit holders and maintain records pertaining to the meetings in accordance with these regulations.

28. The manager shall ensure the compliance with laws, as may be applicable, of the State or the local body
with respect to the activity of the REIT including local building laws.

29. The manager shall ensure that all activities of management of assets of the REIT and activities of the intermediaries or agents or service providers appointed by the manager are in accordance with these regulations and circulars issued thereunder.

RIGHTS AND RESPONSIBILITIES OF SPONSOR(S)

Regulation 11 provides for the rights and responsibilities of the Sponsor(s). These are the followings:-

1. The sponsor(s) shall set up the REIT and appoint the trustee of the REIT.

2. The sponsor(s) shall transfer or undertake to transfer, its entire shareholding or interest in the SPV or entire ownership of the real estate assets to the REIT prior to allotment of units of the REIT to the applicants.

However, this shall not apply to the extent of any mandatory holding of shares or interest in the SPV by the sponsor(s) as required any Act or regulations or circulars or guidelines of government or regulatory authority as specified from time to time.

3. With respect to holding of units in the REIT, the sponsor(s) shall,-

(a) Hold a minimum of 25% of the total units of the REIT after initial offer on a post-issue basis and shall be hold for a period of at least three years from the date of listing of such units.
Further, any holding of the sponsor exceeding the minimum holding as specified in this clause, shall be held for a period of at least one year from the date of listing of such units.

(b) Together hold not less than 15% of the outstanding units of the listed REIT.

4. If the sponsor(s) propose(s) to sell its units below the limit specified in above sub- regulations :-

(a) such units shall be sold only after a period of three years from the date of listing of the units;

(b) prior to sale of such units, the sponsor(s) shall arrange for another person(s) or entity(ies) to act as the re-designated sponsor(s) where the re-designated sponsor satisfy the eligibility norms for the sponsor as specified under these regulation.
However, such units may also be sold to an existing sponsor;

(c) The sponsor/proposed re-designated sponsor shall obtain approval from the unit holders or provide option to exit to the unit holders in accordance with guidelines as may be specified.

However, this clause shall not apply where the units are proposed to be sold to an existing sponsor.

5. If re-designated sponsor(s) propose(s) to sell its units to any another person, conditions specified in
above sub- regulations shall be complied with.

RIGHTS AND RESPONSIBILITIES OF THE VALUER

The valuer(s) shall comply with the following conditions:-

1. The valuer(s) shall ensure that the valuation of the REIT assets is impartial, true and fair in accordance with these regulation.

2. The valuer(s) shall ensure adequate and robust internal controls to ensure the integrity of its valuation reports.

3. The valuer(s) shall ensure that it has sufficient key personnel with adequate experience and qualification to perform property valuations at all times.

4. The valuer(s) shall ensure that it has sufficient financial resources to enable it to conduct its business effectively and meet its liabilities.

5. The valuer(s) and any of its employees involved in valuing of the assets of the REIT, shall not,-

(a) invest in units of the REIT or in the assets being valued; and

(b) sell the assets or units of REITs held prior to being appointed as the valuer, till the time such person is designated as valuer of such REIT and not less than six months after ceasing to be valuer of the REIT;

6. The valuer(s) shall conduct the valuation of the REIT assets with transparency and fairness and shall render, high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgment;

7. The valuer(s) shall act with independence, objectivity and impartiality in performing the valuation;

8. The valuer(s) shall discharge its duties towards the REIT in an efficient and competent manner, utilizing his knowledge, skills and experience in best possible way to complete given assignment;

9. The valuer(s) shall not accept remuneration, in any form, for performing a valuation of the REIT assets from any person other than the REIT or its authorized representative;

10. The valuer(s) shall before accepting any assignment, disclose to the REIT any direct or indirect
consideration which the valuer may have in respect of such assignment;

11. The valuer(s) shall not make false, misleading or exaggerated claims in order to secure assignments; The valuer(s) shall not provide misleading valuation, either by providing incorrect information or by withholding relevant information;

12. The valuer(s) shall not accept an assignment that includes reporting of the outcome based on predetermined opinions and conclusions required by the REIT;

13. The valuer(s) shall, prior to performing a valuation, acquaint itself with all laws or regulations relevant to such valuation.

RIGHTS AND RESPONSIBILITIES OF THE AUDITOR

1. The auditor shall conduct audit of the accounts of the REIT and prepare the audit report based on the accounts examined by him and after taking into account the relevant accounting and auditing standards, as may be specified by SEBI.

2. The auditor shall, to the best of his information and knowledge, ensure that the accounts and financial statements, including profit or loss and cash flow for the period and such other matters as may be specified, give a true and fair view of the state of the affairs.

3. The auditor shall have a right of access at all times to the books of accounts and vouchers pertaining to activities of the REIT.

4. The auditor shall have a right to require such information and explanation pertaining to activities of the REIT as he may consider necessary for the performance of his duties as auditor from the employees of REIT or parties to the REIT or SPV or any other person in possession of such information.

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