Embassy REIT CEO Arvind Maia to resign following SEBI order to suspend him

Arvind Maiya, CEO of Embassy Office Parks Management Services, which runs Embassy REIT, will resign from his post following market regulator Sebi’s directive to suspend him and appoint an interim CEO with immediate effect. SEBI’s direction follows the order of the National Financial Reporting Authority (NFRA) which barred Maia for 10 years from conducting any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate. He has also imposed a fine of Rs 50 lakh on Maia.

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.

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

In a regulatory filing on Tuesday, Embassy Office Parks REIT said, “While we review the order and evaluate all options, Arvind Maiya will resign as CEO of Embassy REIT, with immediate effect, in compliance with SEBI’s direction.”

He will assume the role of Head of Strategy for Embassy REIT.

While evaluating the most appropriate approach for an interim CEO position, the REIT’s board and management team will oversee all of its operations and capital allocation to ensure that normal business is not compromised in any way.

“Our focus remains on maintaining the highest standards in governance and ensuring the continued success of Embassy REIT,” the filing said.

In a 27-page order, Sebi said, “The notice giver (Embassy Office Parks Management Services) is directed to suspend Arvind Maiya from acting as its CEO and to appoint an interim CEO with immediate effect in compliance with applicable laws including ‘fit end’.” The person’s criteria are stayed, till further directions, or till the NFRA order dated August 19, 2024, which Be early,” Sebi said.

This directive will come into effect immediately and will remain in force until further orders.

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

The directive came after SEBI initiated an inquiry into the compliance status of Embassy Office Parks REIT and its manager EOPMSPL with the “fit and proper person” criteria under the Intermediaries Rules.

In a 27-page interim order issued on Monday, the regulator issued a show-cause notice to the company seeking its reply as to why an inquiry should not be initiated against it and a penalty imposed on the firm.

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

“I note that the NFRA order dated August 19, 2024, came into effect 30 days after the order was issued and as per notice submissions (EOPMSPL) an appeal has been filed by Arvind Maiya against the NFRA order. However, it is also pertinent to note that that the appeal is pending, and no stay has been granted,” said Ashwani Bhatia, whole-time member of Sebi.

SEBI, as per its rules, assesses the “fit and proper person” criteria against the very intermediary if an intermediary fails to replace a disqualified person within 30 days of such disqualification.

The order mentions that the notice giver has failed to take any remedial action in this regard and has shown strong reluctance to do so.

“Continued non-compliance by the notice as the operational arm of the registered intermediary, there is a serious violation of the law touching on the competence and integrity of the CEO of the manager of Embassy REIT and the deliberate perpetuation of a source of weakness in the REIT ecosystem by the notice in view of the interest of the unitholders and investors.

“I believe that SEBI needs to urgently intervene in the interest of investors and issue interim directions to stop the ongoing non-compliance through notices,” Bhatia said.

In August this year, NFRA slapped Maia with Rs. 50 lakhs and banned him from conducting any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate for 10 years.

The case involved 7 subsidiary companies of Coffee Day Enterprises Limited (CDEL) for Rs. 3,535 crore related to diversion to Mysore Amalgamated Coffee Estate Limited (MACEL). MACEL is a subsidiary of listed entity CDEL.