{"id":14629,"date":"2020-08-11T15:18:41","date_gmt":"2020-08-11T09:48:41","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=14629"},"modified":"2020-10-03T17:00:24","modified_gmt":"2020-10-03T11:30:24","slug":"maharera-rights-and-liabilities-of-promoter","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/maharera-rights-and-liabilities-of-promoter\/","title":{"rendered":"MAHARERA: Rights and Liabilities of Promoter transferred to the third party"},"content":{"rendered":"\n<p class=\"has-drop-cap\">According to<strong> Section 15<\/strong> of the Real Estate (Regulation and Development) Act, 2016, the promoter requires <a href=\"https:\/\/corpbiz.io\/rera-registration\"><strong>RERA registration<\/strong><\/a> and cannot transfer or assign the majority rights and liabilities. It is done in respect of the real estate project to third party without obtaining prior written <strong><em>consent from 2\/3 allottees<\/em><\/strong>, or without prior <strong><em>written approval of the Authority<\/em><\/strong>. However, a procedure was prescribed for the purpose of the transfer or assign Promoters&#8217; rights by MAHARERA.<\/p>\n\n\n\n<p>On June 4, 2019, <strong><em>MAHARERA\nissued Circular<\/em><\/strong> (2019 Circular) specifying the revised procedure to be\nfollowed for transferring the majority rights and liabilities of a promoter in\nthe real estate project to a third party. The 2019 Circular provides the\nprocedure to be followed by a promoter for obtaining approvals above MAHARERA\nand two-thirds of the allottees and also specifies certain kinds of transfers\nthat are exempted from the requirement to obtain the approvals above.&nbsp; <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/maharera-rights-and-liabilities-of-promoter\/#Changes_in_Internal_Shareholding\" >Changes in Internal Shareholding<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/maharera-rights-and-liabilities-of-promoter\/#Conversion\" >Conversion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/maharera-rights-and-liabilities-of-promoter\/#Amalgamation_or_Merger\" >Amalgamation or Merger<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/maharera-rights-and-liabilities-of-promoter\/#Transfer_Initiated_by_Financial_Institutions_or_Creditors\" >Transfer Initiated by Financial\nInstitutions or Creditors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/maharera-rights-and-liabilities-of-promoter\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Changes_in_Internal_Shareholding\"><\/span>Changes in Internal Shareholding<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Changes in the internal shareholding or constituents of a promoter&#8217;s organization must not require the approval of two-thirds of the allottees or the <strong><em>MAHARERA provided such changes don\u2019t affect:<\/em><\/strong><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"554\" height=\"226\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-40.png\" alt=\"Changes in Internal Shareholding\" class=\"wp-image-14640\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-40.png 554w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-40-300x122.png 300w\" sizes=\"(max-width: 554px) 100vw, 554px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conversion\"><\/span>Conversion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Any conversion of the promoter entity is available from: <\/em><\/strong><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"618\" height=\"190\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-41.png\" alt=\"Conversion\" class=\"wp-image-14631\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-41.png 618w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-41-300x92.png 300w\" sizes=\"(max-width: 618px) 100vw, 618px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Amalgamation_or_Merger\"><\/span>Amalgamation or Merger<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An amalgamation\/ merger that is voluntarily initiated by a promoter in which the amalgamating company has one or more than one registered projects, and wherein the registered project is transferred, must be regarded as a transfer initiated by a promoter. The <a href=\"https:\/\/corpbiz.io\/online-rera-registration-for-promoters\"><strong>RERA registration for Promoter<\/strong><\/a> is required and he has to obtain approval of 2\/3 of the allottees for MAHARERA.<\/p>\n\n\n\n<p><strong><em>However, such approval is not\nrequired if:<\/em><\/strong><\/p>\n\n\n\n<ul><li>The amalgamation, merger or demerger of the companies, is not regarded as the transfer under Section 47 of the <strong><em>Income Tax Act, 1961<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/The_Income-tax_Act,_1961\"><strong><em>[1]<\/em><\/strong><\/a><\/sup><\/li><li>Where 75% of the shareholders of an existing company remain the same in the resultant company.<\/li><\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/online-rera-registration-process-for-builders\/\">All You Need To Know About RERA Registration Process<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Transfer_Initiated_by_Financial_Institutions_or_Creditors\"><\/span>Transfer Initiated by Financial\nInstitutions or Creditors<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A bare reading of\n2019 Circular suggests that approval of allottees or MAHARERA is not required\nin cases where a transfer of the promoter rights and obligations in a real\nestate project is pursuant to enforcement of security by the financial\ninstitutions or creditors or under the operation of law, provided that the loan\nand charge over a project was disclosed in the registration details of a\nproject on the website of MAHARERA. Th<strong><em>e 2019 Circular provides a few examples of\nenforcement of security such as:<\/em><\/strong><\/p>\n\n\n\n<ul><li>Invocation\nof a pledge of shares of promoters <\/li><li>A\ntakeover of a project under the provisions of Securitisation and Reconstruction\nof Financial Assets &amp; Enforcement of Securities Interest Act, 2002 and the\nInsolvency &amp; Bankruptcy Code, 2016 (IBC)<\/li><li>A\ntakeover of the management of promoter in the case of the IBC. <\/li><\/ul>\n\n\n\n<p><strong><em>The 2019 Circular prescribes\nthe following procedure required to be followed for change in a promoter\naccording to lenders enforcing their security over a project:-<\/em><\/strong><\/p>\n\n\n\n<ul><li>First,\nthe promoter must inform MAHARERA in writing with the format prescribed in\nAnnexure &#8220;A&#8221; within 7 days of being aware of potential transfer\narising out of enforcement of the security or mortgage.<\/li><li>Simultaneously,\nthe promoter shall inform every allottee regarding such impending or potential\ntransfer.<\/li><li>Within\nseven days of the transfer being affected by the financial\ninstitution\/creditors, such financial institutions\/creditors must intimate to\neach of the allottees and MAHARERA of the enforcement of security and transfer\nof ownership of the promoter organization or transfer of the project.<\/li><li>After\nthat, the financial creditor (acting as a new promoter) or a new promoter\n(appointed by financial institutions) shall apply to MAHARERA for making\nnecessary corrections to the registration details of the project.<\/li><li>The\nfinancial creditor must submit an undertaking stating that they must comply\nwith all the obligations under an agreement for sale executed by the erstwhile\npromoter with the allottees and assume all the erstwhile promoter&#8217;s\nobligations. <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Process followed where Approvals\nare required<\/h3>\n\n\n\n<p><strong><em>The promoter required to\nfollow the following process:<\/em><\/strong><\/p>\n\n\n\n<ul><li>The promoter must first obtain the consent of two-thirds of the allottees of the project.<\/li><li>The promoter shall apply to MAHARERA with a format prescribed in Annexure \u201cA\u201d along with the consent of two-thirds of the allottees on the date of application. <\/li><li>Under the application as prescribed under Annexure A, the existing promoter must make the following declarations to MAHARERA:<\/li><\/ul>\n\n\n\n<ol><li>There are no pending cases before a court or National Company Law Tribunal or any authorized body regarding the transfer of a promoter&#8217;s rights and liabilities concerning the project.<\/li><li>There is not any bar in the transfer of rights &amp; liabilities to a third party, from any financial institutions or financiers who charge on the project.<\/li><li>There is no prohibitory order passed by the court of law against the transfer of the present project to a third party. <\/li><\/ol>\n\n\n\n<ul><li>MAHARERA must within one month of filing of such application either grant approval (with or without any conditions) or reject such application.<\/li><li>After receiving the approval of MAHARERA, a new promoter must submit an undertaking stating that they shall comply with all the obligations under an agreement for sale executed by the erstwhile promoter with an allottee and assume all the obligations of the erstwhile promoter.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> The step taken by MAHARERA will go a long way toward boosting the confidence of lenders and new promoters. However, the declaration sought from the existing promoter declares there are no pending proceedings regarding the transfer of its rights\/obligations concerning the project. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/guide-on-rera-registration-for-real-estate-agents\/\">Guide on RERA Registration for Real Estate Agents<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>According to Section 15 of the Real Estate (Regulation and Development) Act, 2016, the promoter requires RERA registration and cannot transfer or assign the majority rights and liabilities. It is done in respect of the real estate project to third party without obtaining prior written consent from 2\/3 allottees, or without prior written approval of [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":14645,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[182],"tags":[862],"acf":{"service_id":"102"},"authorName":"Soumya Bajpai","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/01\/0.jpg","authorDescription":"Soumya has done LLB (Hons) and has a 2+years experience in writing. Her main interest is in reading judgments, new enactments and amendments taking around in law. She always strives to bring the best to work that she does.","postViews":6534,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/14629"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=14629"}],"version-history":[{"count":11,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/14629\/revisions"}],"predecessor-version":[{"id":17330,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/14629\/revisions\/17330"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/14645"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=14629"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=14629"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=14629"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}