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CS Professional · Strategic Management and Corporate Finance · Real Estate Investment Trusts

Which of the following is a condition for a person to act as a trustee of a SEBI-registered REIT?

The trustee of a REIT must be registered with SEBI as a debenture trustee and must not be an associate of the sponsor or the manager. This independence lets it oversee the manager and protect unit holders' interests.

  1. AThe trustee must be registered with SEBI as a debenture trustee and must not be an associate of the sponsor or managerCorrect
  2. BThe trustee must be a promoter of the sponsor group to align interests
  3. CThe trustee must be the same entity as the manager to reduce costs
  4. DThe trustee must be a foreign bank with an Indian branch

Explanation

The trustee must hold SEBI registration as a debenture trustee and must be independent, not being an associate of the sponsor or manager. Combining the roles of trustee and manager, or choosing a sponsor-group entity, defeats the separation intended by the Regulations.

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