On Wednesday, the Securities and Exchange Board of India (Sebi), the market regulator, announced a significant decision to exempt Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) from certain restrictions that previously applied during the allotment and lock-in periods. This exemption pertains specifically to issuing units to an employee benefit trust engaged in unit-based employee benefit (UBEB) schemes.

This regulatory adjustment aims to streamline the processes linked to employee benefit schemes. By removing the previous restrictions, Sebi is enhancing the ease of conducting business, particularly in how these trusts can acquire and subsequently distribute units to employees. The regulatory change allows employee benefit trusts to acquire units without being subjected to the standard lock-in requirements and allotment constraints that typically apply to other investors.

The decision by Sebi is expected to facilitate a smoother operation of UBEB schemes within InvITs and REITs, making it easier for these entities to transfer ownership of units to employees. This could potentially lead to increased participation in these schemes by employees, offering them a more tangible stake in the success of their companies. The exemption is tailored to promote better corporate governance and employee satisfaction by aligning the interests of the employees with the financial performance of the trusts they work for.

Overall, Sebi’s move is seen as a positive step towards fostering a more inclusive environment in the corporate finance sector, particularly in how investment vehicles like InvITs and REITs manage and incentivize their workforce through equity-like benefits.