Embassy Office Parks, India's largest real estate investment trust (REIT), said on Tuesday Aravind Maiya will step down as CEO of Embassy REIT with immediate effect, following the market regulator's decision that he is unfit for the role.
Shares of Embassy REIT dropped as much as nearly 3% following the company's announcement.
In an interim order available on the Securities and Exchange Board of India's (SEBI) website, the regulator on Monday directed Embassy Office Parks Management Services, the manager of Embassy REIT, to suspend Aravind Maiya since he did not meet the "fit and proper" criteria for the position.
The regulator also told Embassy to appoint an interim CEO with immediate effect.
The "fit and proper" criteria, used across institutions which have a fiduciary responsibility to investors, includes checks on an individual's track record, professional history and any past regulatory orders against them.
SEBI's action followed an order by the National Financial Reporting Authority (NFRA) in August, which had examined the statutory auditors of Coffee Day Enterprises on their role in alleged financial irregularities at the company in 2018-19.
Maiya was the engagement partner at the statutory auditor for Coffee Day Enterprises during the reported period.
The NFRA, a quasi regulator that looks into the conduct of auditors, said it found serious lapses on the part of the auditor, Maiya and others.
While Maiya has challenged the order, SEBI found he did not in the interim meet the "fit and proper" criteria for institutions such as REITs.
The (NFRA) Order leads to "a reasonable inference that Mr. Aravind Maiya failed to act in public interest. Instead, he acted in a manner which harmed ordinary investors," SEBI said in its order.
The order further noted that despite a number of emails, meetings and specific instructions, the manager of Embassy REIT had tried to retain Maiya.
Embassy REIT is India's first publicly listed REIT and owns and operates a 51.1 million-square-feet portfolio.