Aravind Maiya, CEO of Embassy Office Parks Management Services which manages Embassy REIT, will resigns from his post, following market regulator Sebi’s instructions to suspend him and appoint an interim CEO immediately. The Sebi directorate is following an order by the National Financial Reporting Authority (NFRA) which barred Maiya for 10 years from conducting any audit on the financial statements or internal audit of the functions and activities of any company or corporation. Maiya also imposed a penalty of 50 lei.

Embassy Office Parks Management Services Pvt Ltd (EOPMSPL) is the manager of Embassy Office Parks REIT, which has been 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).

In a regulatory filing on Tuesday, Embassy Office Parks REIT said: “While we review the order and evaluate all options, in accordance with the SEBI directive, effective immediately, Aravind Maiya will step down as CEO of Embassy REIT.”

He will take on the role of Head of Strategy for Embassy REIT.

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 while evaluating the most appropriate approach for the interim CEO position, it added. “Our focus remains on maintaining the highest standards of governance and ensuring the continued success of Embassy REIT,” the filing said. In a 27-page order, SEBI said, “The notice (Embassy Office Park Management Services) is directed to suspend Aravind Maiya from acting as CEO and appoint an interim CEO with with immediate effect in accordance with applicable laws, including “fitness and right person criteria, until further instructions, or until the NFRA Order dated August 19, 2024 is suspended/announced, whichever is earlier,” Sebi said.

The direction will be effective immediately and will remain in effect until further orders.

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

The Sebi direction came after it began examining the compliance status of Embassy Office Parks REIT and its manager EOPMSPL with the ‘suitable person’ criteria of the intermediaries regulations.

In a 27-page interim order issued on Monday, the regulator issued a show-cause notice to the company, seeking its response as to why it should not be investigated and imposed a sanction.

EOPMSPL was given 21 days to file its reply/objections.

“I note that the NFRA order dated August 19, 2024 came into effect after 30 days of the order and as per the submissions of the notified body (EOPMSPL) Aravind Maiya filed an appeal against the NFRA order. However, this It is also pertinent to note that the appeal is pending and no stay has been granted,” said Ashwani Bhatia, Whole Time Member of Sebi.

Sebi, as per its regulations, invokes the ‘fit and proper person’ assessment against the intermediary itself if an intermediary fails to replace a disqualified person within 30 days of such disqualification.

The order stated that the applicant had not taken any remedial action in this regard and had shown strong reluctance to do the same.

“In the face of persistent non-compliance by the notified as an operational component of a registered intermediary, serious violations of the law targeting the competence and integrity of the managing director of the Embassy REIT manager and considering that the interest of unit holders and investors is at stake due to deliberate retention of a source of weakness in the REIT ecosystem by the notified.

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

In August this year, the NFRA fined Maiya Rs 50 and banned him for 10 years from conducting any audit of the financial statements or internal audit of the functions and activities of any company or corporation.

The case relates to diversion of Rs 3,535 crore from 7 subsidiary companies of Coffee Day Enterprises Ltd (CDEL), to Mysore Amalgamated Coffee Estate Ltd (MACEL). MACEL is a subsidiary of the listed entity CDEL.