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Regulatory Updates: Real Estate Investment Trusts Regulations 2014 (Reit) in Force
Regulatory Updates: Real Estate Investment Trusts Regulations 2014 (Reit) in Force
Regulatory Updates: Real Estate Investment Trusts Regulations 2014 (Reit) in Force
UPDATE
October
&
November 2014
REGULATORY
UPDATES
OCTOBER & NOVEMBER 2014
A REIT cannot invest in vacant land or agricultural land or mortgages other than mortgage backed securities.
At least 80% of the value of the REIT Assets should be invested proportionate to the holding of the REITs in completed
and rent generating properties, i.e., properties which have been leased or rented out in accordance with an
agreement entered into for the purpose.
It can invest in at least two projects, directly or through the SPV, with not more than 60% of value of assets, proportionately
on a consolidated basis, invested in one project.
A REIT is required to hold completed and rent generating property, whether directly or through the SPV, for a period of
not less than three years from the date of purchase of such property by the REIT or SPV.
The valuer for REIT properties should not be an associate of the sponsor, manager or trustee and should have not
less than five years of experience in valuation of real estate.
Not less than 75% of the revenue of the REIT and the SPV, other than gains arising from disposal of properties, should, at all
times, be from rental, leasing and letting real estate assets or any other income incidental to the leasing of such
assets. Not less than 75% of values of the REIT assets should be rent generating proportionately on a consolidated basis.
A REIT is required to distribute not less than 90% of its net distributable income after tax as dividend to the unit holders on
a half yearly basis in accordance with the procedure mentioned in the offer document or follow-on offer document. Such
distribution is required to be declared and made not less than once every six months in every financial year and not more
than 15 days from the date of such declaration. (Sited from AZB Partners Newsletter Inter alia dated October
2014)
REGULATORY
UPDATE
October
&
November 2014
This ordinance was passed to mitigate the 2011 Supreme Court judgment where it was held preposterous for the NTC to
claim to be the governments agent and was ordered eviction from a prime 2.5 acre plot in Mumbai. NTC had lost land on similar
grounds elsewhere and had placed other sick mills on tenanted land at risk. This ordinance will help protect public investment
made to revive sick textile mills transferred to the NTC and amends the Sick Textile Undertakings (Nationalisation) Act 1974 and
the Textile Undertakings (Nationalisation) Act 1995. The Ordinance explicitly clarifies that the lease-hold rights of the sick
textile undertakings continue to remain vested in the Central Government and is aimed at reversing the effect of judicial
pronouncements that make a distinction between NTC and the government. (News Report)
SUPREME COURT RESTRICTS JURISDICTION IN CHEQUE DISHNOUR CASES TO PLACE WHERE CEHQUE IS
DISHONOURED
The Supreme Court of India, while hearing a Cheque dishonor case, emphasized that the concepts of Civil law for invoking
territorial jurisdiction are wider and cannot be strictly applied in criminal matters (i.e. Dishonor of Cheque under Negotiable
Instruments Act). A crime is committed on fulfilling the conditions in law (presentation of cheque within validity, notice
demanding payment and drawers failure to pay etc.) and once the crime is committed, the jurisdiction of the court to try the
offence should be determined by reference to the place where the cheque is dishonored.
The Apex Court opined that law endeavors to book the culprit and to provide relief to aggrieved party but not to harass the
culprit. With the above observation, it held that the place, sites or venue of judicial inquiry and trial of the offence must logically
be restricted to where the drawee bank is located.
It further stated that courts were burdened by the pending cases on account of multiplicity of complainants at various places;
consequently, restricting jurisdiction of courts in Cheque dishonor cases would reduce multiplicity of litigation and stop
harassment of the person issuing the Cheque. (Dasarth Rupsingh Rathod Vs State of Maharashtra SC)
REGULATORY
UPDATE
October
&
November 2014
after redemption, the action amounts to a clog/obstacle for redemption of the property. This prevents the mortgagor from
getting back the property in the same condition as he gave it when the mortgage was executed. (Thakar Singh vs. Mula Singh
dated 14.10.2014 SC)
REGULATORY
UPDATE
October
&
November 2014
Yash Sanchiher
Manager
Tel: +91 124 469 5555
yash.sanchiher@ap.cushwake.com
Disclaimer
This update has been prepared solely for information purposes. The information on which this update is based has been obtained from sources we believe to be reliable, but we have
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