K Raheja Investment to settle REIT norms violation case

02 Dec 2024 CW Team

The settlement order followed K Raheja Investment Managers' proposal to resolve the proceedings initiated against it without "admitting or denying the findings of facts and conclusions of law." Sebi initiated the proceedings for alleged breaches of REIT regulations related to the computation and disclosure of net distributable cash flows (NDCF) at the Special Purpose Vehicle (SPV) level.

The notice issued by Sebi on August 24, 2023, accused K Raheja Investment Managers of errors in calculating NDCF figures, as well as incomplete and incorrect disclosures in half-yearly and annual reports. Furthermore, it was alleged that distributions were made to unit holders despite negative cash balances in the SPV, with funds borrowed to facilitate these distributions.

K Raheja Investment Managers submitted a settlement application to Sebi to resolve the matter. Following revisions to the proposed settlement terms, the High Powered Advisory Committee (HPAC) approved the settlement. Upon remittance of the Rs 68.73 lakh fee, Sebi's adjudicating officer, Asha Shetty, disposed of the proceedings.

This settlement highlights Sebi's regulatory focus on compliance within the REIT sector and underscores the importance of accurate financial reporting and adherence to disclosure norms by market participants.

K Raheja Investment Managers resolved a case with the Securities and Exchange Board of India (Sebi) concerning alleged violations of REIT (Real Estate Investment Trust) rules by paying a settlement fee of Rs 68.73 lakh. The case involved Mindspace Business Parks REIT, which K Raheja Investment Managers LLP (now known as K Raheja Corp Investment Managers Pvt Ltd) manages. Sponsored by the K Raheja Corp group, Mindspace Business Parks REIT has been listed on Indian stock exchanges since August 2020 and owns office portfolios across Mumbai, Pune, Hyderabad, and Chennai. The settlement order followed K Raheja Investment Managers' proposal to resolve the proceedings initiated against it without admitting or denying the findings of facts and conclusions of law. Sebi initiated the proceedings for alleged breaches of REIT regulations related to the computation and disclosure of net distributable cash flows (NDCF) at the Special Purpose Vehicle (SPV) level. The notice issued by Sebi on August 24, 2023, accused K Raheja Investment Managers of errors in calculating NDCF figures, as well as incomplete and incorrect disclosures in half-yearly and annual reports. Furthermore, it was alleged that distributions were made to unit holders despite negative cash balances in the SPV, with funds borrowed to facilitate these distributions. K Raheja Investment Managers submitted a settlement application to Sebi to resolve the matter. Following revisions to the proposed settlement terms, the High Powered Advisory Committee (HPAC) approved the settlement. Upon remittance of the Rs 68.73 lakh fee, Sebi's adjudicating officer, Asha Shetty, disposed of the proceedings. This settlement highlights Sebi's regulatory focus on compliance within the REIT sector and underscores the importance of accurate financial reporting and adherence to disclosure norms by market participants.

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