SEBI Imposes Penalties on Axis Trustee Services for Non-Compliance with Market Regulations
Sebi Imposes Fine on Axis Trustee Services for Disclosure and Governance Lapses
In a recent order, the Securities and Exchange Board of India (Sebi) has levied a fine of Rs 10 lakh on Axis Trustee Services Ltd for disclosure and governance lapses linked to Embassy Office Parks REIT. This fine is a result of an August 19, 2024, order by the National Financial Reporting Authority (NFRA), which found Aravind Maiya, then CEO of Embassy Office Parks Management Services Pvt Ltd, guilty of professional misconduct, imposing a Rs 50 lakh penalty and a ten-year debarment from audit functions.
According to the Sebi order passed on April 29, Axis Trustee Services was informed of the NFRA order on August 20, 2024, but the disclosure to unitholders was made only after a delay of 53 days. The regulator observed that the information was material as it impacted the competence and integrity of the CEO and required prompt disclosure. While the primary responsibility of disclosures lies with the manager, the trustee has a parallel and proactive duty to ensure compliance and address delays urgently.
Sebi noted that the trustee failed to independently assess whether Maiya met the 'fit and proper person' criteria despite a direction by Sebi on August 20, 2024. This failure led to the regulator finding that Axis Trustee Services Ltd flouted the REIT regulations.
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Embassy Office Parks Management Services Pvt Ltd (EOPMSPL) is the manager of Embassy Office Parks REIT, which was sponsored by Bengaluru-based realty firm Embassy Group and global investment firm Blackstone. In an interim order passed by Sebi on November 4, 2024, the markets watchdog directed the manager to suspend Maiya and appoint an interim CEO. Subsequently, Ritwik Bhattacharjee was named interim CEO, later succeeded by Amit Shetty as CEO of Embassy Office Parks REIT.
| Quarter | Disclosures made to Unitholders | Delay in Disclosure |
|---|---|---|
| August 2024 | September 2024 (53 days after NFRA order) | 53 days |
Note: The delay in disclosure is calculated from the date of NFRA order (August 19, 2024) to the date of disclosure to unitholders (September 2024).
Investor Takeaway
Investors should be aware of potential penalties for non-compliance with market regulations.
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