Sebi Suspends CEO of Embassy Office Parks: NFRA Audit Expires: Rediff Moneynews

New Delhi, Nov 4 (PTI) Sebi on Monday ordered the suspension of Aravind Maiya, the CEO of Embassy REIT manager Embassy Office Parks Management Services, and appointed an interim CEO with immediate effect.

Sebi’s directions follow an order by the National Financial Reporting Authority (NFRA) that banned Maiya from conducting any audit relating to financial statements or internal audits of the functions and activities of a company or legal entity for 10 years. It also imposed a fine of Rs 50 lakh on Maiya.

“The notice taker (Embassy Office Parks) is directed to suspend Aravind Maiya as CEO and appoint an interim CEO with immediate effect, in accordance with applicable law, including ‘fit and proper person’ criteria, until further instructions, or until the NFRA Order dated August 19, 2024 is suspended/set aside, whichever is earlier,” Sebi said.

The directive enters into force immediately and will remain in force until further notice.

Embassy Office Parks Management Services Pvt Ltd (EOPMSPL) is the manager of Embassy Office Parks REIT, which was sponsored by Bengaluru-based real estate firm Embassy Group and global investment firm Blackstone.

Embassy REIT is India’s first listed Real Estate Investment Trust (REIT).

The NFRA order relates to deficiencies in the audit of Coffee Day Enterprises for the 2018-19 financial year.

The Sebi direction came after it started examining the compliance status of Embassy Office Parks REIT and its manager EOPMSPL with the “fit and proper person” criteria under the intermediaries regulations.

In a 27-page interim order issued on Monday, Sebi directed Embassy Office Parks Management Services Pvt Ltd (EOPMSPL) to appoint an interim CEO with immediate effect, in accordance with applicable law until further directions, or until the August 19 NFRA order. 2024 will be postponed/set aside, whichever is sooner.

Sebi directed Embassy Office Parks Services to ensure compliance with the ‘fit and proper person’ criteria.

The regulator has also issued a show-cause notice to the company asking why an investigation should not be initiated against the company and why a fine should not be imposed on the company.

EOPMSPL has been given 21 days to file its response/objections.

“I note that the NFRA order dated August 19, 2024 came into effect after 30 days of the issuance of the order and as per the observations of the notice (EOPMSPL), an appeal against the NFRA order has been filed by Aravind Maiya. It is also pertinent to note that the appeal is pending and no stay has been granted,” said Sebi’s regular member Ashwani Bhatia.

Sebi, as per its regulations, invokes the assessment of the criteria of “suitability and propriety” against the intermediary itself if an intermediary fails to replace a disqualified person within 30 days of such disqualification.

The order stated that the notice has not taken any corrective action and has shown great reluctance to do the same.

“In light of the persistent non-compliance by the Notifier as the operational arm of a registered intermediary, serious violations of the law affecting the competence and integrity of the CEO of the Manager of Embassy REIT, and given that the interests of shareholders and investors is at stake due to the notification’s deliberate retention of a source of weakness in the REIT ecosystem,

“I am of the view that Sebi should urgently intervene in the interest of investors and issue interim directions to stop the continued non-compliance through the notice,” Bhatia said.

In August this year, the NFRA fined Aravind Maiya Rs 50 lakh and barred him from conducting any audit relating to financial statements or internal audits of the functions and activities of any company or legal entity for 10 years.

The case relates to diversion of Rs 3,535 crore from seven subsidiaries of Coffee Day Enterprises Ltd (CDEL) to Mysore Amalgamated Coffee Estate Ltd (MACEL). MACEL is a subsidiary of the listed entity CDEL.