The Securities and Exchange Board of India (SEBI) has passed an interim order directing the suspension of Aravind Maiya, from acting as the chief executive officer of Embassy Office Parks Management Services, the manager to Embassy Office Parks REIT, in connection with the audit of a funds diversion case by Coffee Day Enterprises.

The regulator also ordered the appointment of an interim CEO with immediate effect. Maiya had become CEO of Embassy REIT in July 2023.

SEBI’s investigations and interim directions follows an earlier order by National Financial Reporting Authority (NFRA) against Maiya and the audit firm he had been attached to then.

In August, NFRA had barred Maiya, a former partner at BSR & Co that had conducted the audit of CDE, from practising for ten years and also slapped a ₹50 lakh penalty on him. The firm and the partners had been held guilty of concealing the fraud at CDE and of misconduct.

SEBI said it examined the status of compliance of Embassy Office Parks REIT and assessed Maiya’s eligibility to be the CEO of the REIT and on October 4, it communicated to the parties involved that he did not meet the ‘fit and proper person’ criteria for acting as the CEO.

No relation

Embassy REIT’s management made the submission that the NFRA order did not have any relation to the REIT, its portfolio, the manager or their auditors. It pointed out that Maiya had left BSR & Co in May 2019 and has not practised as a chartered accountant or auditor since then. They also said that taking any action against Maiya would be detrimental to the interests of the REIT and its unitholders.

SEBI’s wholetime member, Ashwani Bhatia, while passing the order, argued that the CEO of a manager of a REIT played a key role in its operations and it should not be managed by a person who was under a cloud of an operating NFRA order.

It was evident that “Maiya’s serious professional misconduct during the audit of a listed public company, as held by the NFRA, displays a complete failure to act in public interest. Therefore he cannot be reasonably considered competent to supervise Embassy REIT as CEO if its manager…,” he said. He added that allowing Maiya to continue at the helm of the REIT’s affairs may cause harm to investors, exposing them to risk.

Embassy Office Parks Management Services has been directed to comply with the ‘fit and proper person’ criteria and also show cause as to why suitable action should not be taken against it.

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