"Trusted Partner for 25+ Fortune 500 Companies"

MIDC Guidelines

Transfer guidelines for MIDC Industrial Plots in Maharashtra

Transfer Process of Industrial Plots

Maharashtra Industrial  Development Corporation (MIDC) allots plots to the companies / Firms for setting up their industrial units in the designated industrial area. However, sometimes due to financial / technical difficulties plot holders are not able run their industry and require to transfer the plot and other assets either  to the third party or their subsidiary or sister company for the furtherance of their business interest or change of business strategy. MIDC sets Transfer Process of Industrial Plots of leasehold properties in Maharashtra.

Over a period of time the MIDC has revised its transfer guidelines few times keeping in view the main objective of MIDC regarding utilisation of plots for the business activity which results in the economic growth of the country and also generates employment.

The main objective of this document is to provide Salient features of the various transfer guidelines issued by the MIDC during last 25 years for Transfer Process of Industrial Plots in Maharashtra.

MIDC Circular No. 2633 dated 12 May 1998 Laying Transfer Guidelines

The MIDC formulated and issued detailed transfer guidelines to facilitate Transfer Process of Industrial Plots. This circular categorised the transfer process of MIDC Plots in 2 broad categories:

  1. Formal Transfer:- Standard (Minimum) Transfer fee */ no fees is payable for transfer of plot.
  • Non-Formal Transfer: –Transfer fee i.e. 10% / 30% of the Differential Premium** is payable as per MIDC policy for transfer of plot.

Formal Transfers

  1. Formal Transfers where minimum transfer charges will be charged:-
  1. The plot holder wants to change the constitution and include his blood relations or close relations (i.e. husband / wife / sons / daughters / father / mother / brothers / sisters or removal of any person) excluding the legal heir.
  1. The transfers due to death or by bequeath / will / heirship
  1. All involuntary transfers including amalgamation, demergers etc. under the direction of the Competent Court / Tribunals / Government Body.
  1. Transfer from promoter of the Co-op. society to the Co.op. Society registered under  Maharashtra Co.op. Society Act.
  • Formal Transfers where no fee / premium will be charged:-
  1. Transfer from promoter of the proposed private limited company to private limited company incorporated by the promoter within stipulated time period
  1. Change in the name of the proprietary concern / partnership firm, without changes in the individual proprietor / partners or  change in the name of the limited company under the provisions of the Companies Act 1956. or where there is change of management of the limited company not involving transfer of interest in the land/Shed/gala there being no transfer of interest.

Non-Formal Transfer

Any transfer which do not fall under  the category of Formal Transfer will be treated as Non-Formal Transfer and the same will be permitted subject to recovery of differential premium as mentioned below:-

  1. Where the Licensee / Lessee has constructed or consumed minimum 10% FSI of the plot area such transfer will be permitted on recovery of 10%of the differential premium.
  1. Where the condition at above is not fulfilled in such transfer will be permitted on recovery of the 30% of the differential premium.

Following transfers shall be treated as Non-Formal Transfer:-

  1. Inducting Individual not being Blood Relations.
  • The Changes in Partners not being Blood Relations.
  • Transfer from Proprietor to Partners of the Partnership Firm not to the Blood Relations.
  • Promoter to Proposed Partnership.
  • From Proprietor or Partnership to the Private Limited Company / Limited Company.
  • From Holding to Subsidiary or from One Subsidiary to another Subsidiary of the Same Holding Company.
  • From one Limited Company to another Limited Company.
  • From Private Limited Company to Individual or Partners of the Partnership Firms.

MIDC Circular No. 15 dated 14 May 2007 for  amendment in Transfer Guidelines of Industrial Plot (Transfer Process of Industrial Plots) in Maharashtra

As per earlier guidelines, permission for transfer of open plot was not being granted if the plot holder did not obtain the BCC and  also not gone into the production. However, considering the financial recession and pressing requirements of industrial plots, the open plots were allowed to be transferred with condition that the permission will not be granted for five years from the date possession for following:-

  • Transfer, Sublet, Sub-Lease of open plot if plot holder has not obtained BCC and not gone into production.
  • Any partnership where holding of original promoter is going below 51%.

To know details on Building Competition Certificate, Click here

FLoor Space Index (FSI) consumption/ utilization of the plot is one of the main conditions for retaining the leasehold rights. Maharashtra being a preferred destination of manufacturers, with the scarcity of land to meet the requirement of all FSI norms are laid clearly and industries have no choice but the follow them. To know the FSI policy/norms in Maharashtra, Click here.

MIDC Circular No 143 dated 12 Dec 2011 for amendment in Transfer Guidelines of Industrial Plot (Transfer Process of Industrial Plots) in Maharashtra

Circular dated 12 May 1998 was silent on Voluntary Transfers of Amalgamation / Merger / demerger  of companies which were approved by the Hon. High Court. Since all such actions were being done under the order of Hon High courts / Tribunal etc, such transfers were being considered as the Formal Transfer.  The circular dated 12 May 1998 was also silent on creation of security by the plot holder without MIDC consent.

To remove the above ambiguity following amendments were done vide circular dated 12 Dec 2011:-

  1. All involuntary transfers pursuant to any order / scheme of the Competent Court / Tribunals / appropriate Government / BIFR / AAIFR etc. shall be permitted on recovery of the standard transfer charges (STF) and not differential premium.

However, if any scheme of amalgamation, takeover, merger or demerger etc. are framed between two or more entities in the ordinary course of business as part of their corporate / business strategy, and mere sanction was obtained to such scheme by the Competent authority, Tribunal or Court, in such an event such cases shall not be treated as formal transfer and the same shall be permitted on recovery of differential premium.

  • Where any security is created on the plot without prior written consent of the Corporation or without executing a tripartite Agreement or where such consent is given but the plot holder is found to be in material breach of its obligations under the terms of lease or allotment or of the consent, the Corporations shall without prejudice to its rights to terminate the lease / allotment and / or to repossess the plot and / or to adopt any other recourse, or remedy or Proceedings, be entitled to recover differential premium, even though the said transfer is pursuant to the order / scheme of the Competent Court / Tribunal / Appropriate Government /  BIFR / AAIFR etc.

MIDC Circular No. 164 dated 1 January 2013 for amendment in Transfer Guidelines for Companies:

Change in the name of company registered under Companies act 1956 is considered as a formal transfer and MIDC takes the note for change in name without charging any premium but any change in original Directors / Shareholders or their shareholding  was being considered as Non-formal transfer and permission for the same was being given on payment of Differential premium.

To clear the confusion related to nature of change in original Directors / Shareholders in Private Limited company / Public Limited company as well if conversion of Private Limited company to Public Limited company required changes in original Directors / Shareholders as per law to be consider Formal or Non-Formal Transfer following amendments have been done by the MIDC vide its circular dated 01st Jan 2013:Following changes will be considered as a Formal Transfer and note for the same would be taken without charging any premium:

  1. Change in the name of legal entity other than Public Limited Company and shareholding of original Directors / Shareholders is not going below 51%.
  • Converting Partnership firm to Private Limited / Public Limited and increasing the numbers of Directors / Shareholders and if the shareholding of original Directors / Shareholders is not going below 51%.
  • Converting Private Limited company to Public Limited company and increasing the numbers of Directors / Shareholders as per the required law if the shareholding of original Directors / Shareholders is not going below 51%.
  • In Public Limited company if the shareholding other than Public Share of Original Shareholders is not getting less than Majority and if the control on management as per companies act 1956 is remain with them.

2.     If the shareholding oforiginal Directors / Shareholders is going below 51% then it should be consider as a Non-formal transfer and differential premium should be charged as per prevailing MIDC policy.  

To know on the required documentation for Transfer Process of Industrial Plots in case of change in company type or constitution, click here

MIDC Circular No. D 54876 dated 19 November 2013 for amendment in Transfer Guidelines of Open Industrial Plot in Maharashtra:-

As per MIDC circular No.15 dated 14 May 2007 MIDC does not give the permission for transfer, Sublet, Sub-Lease until plot holder obtain the BCC and goes into production, as well the share holding of original promoter cannot go below 51% for five years from the date of possession.

Companies face following difficulties due to MIDC restriction for transfer of open plot for 5 years from the date of possession:

  1. MIDC allotting the plot on priority basis to Maharashtra Govt. recognised Mega Project, FDI Projects, Industries providing machineries to Defence, Fortune Global – 500 / 200 companies, Economics Times – 200 / 500 companies, Forbes Global – 2000 / Asia – 50 / Asia Best – 200 companies and their holding / subsidiaries companies and also to those companies which are having huge proposed investment and generating huge employment.

Big companies may have various groups for doing the business example – Holding Companies, Subsidiaries of Holding Companies, Sister Companies etc. these group companies do business collectively. Sometimes the company in whose name plot is allotted is not able to develop the plot and required to take the financial / Technical help from their holding or subsidiaries / sister company and  as per the law sometimes plot needs to be transfer in the name of holding / subsidiaries / sister company but as per policy open plot cannot be transfer for 5 years.

  • Some plot holders take industrial plot in the name of proprietor and want to create Partnership firm or add additional partner in partnership firm for taking the financial or technical help for development of plot.

Following amendments have been done for transfer of open plot:-

  1. Plots on which construction is not started or construction as per approved plans is started but minimum 10% construction is also not done. Those plot shall be consider as Open Plots.
  • Permission for transfer / sub division and transfer of the plot in the name of Holding / Subsidiary / Sister can be given on recovery 30% differential premium for Plots allotted in the name of company and Agreement to Lease is executed but 5 years period for transfer is not completed.
  • If plot allotted in the name of Proprietor, Permission to proprietor for creating Partnership firm where profit/loss sharing ratio of proprietor is more than 51% can be granted on recovery of 30% differential premium. Proprietor cannot reduce his shareholding less than 51% or cannot retire for five year from the date of permission.
  • Permission on recovery of 30% differential premium should be granted if Partnership Firm / Company inducted new Partner / Shareholder and Original Partners / Shareholders are having more than 51% profit/loss or shareholding in the Partnership Firm / Company. Original Partners / Shareholders cannot reduce their shareholding less than 51% or cannot retire for five year from the date of permission.
  • STF should be charged if no differential premium is coming due to no change in land rate.
  • Permission for transfer of open plot can be given on recovery of 30% differential premium if the Plot area is 1,00,000 Sq. Mtrs. or more or investment of proposed transferee is more than 100 Cr.
  • Development period for transferred open plot will be balance period of Agreement to Lease or 2 years from the date of transfer whichever is more.
  • This circular for transfer of open plot is applicable for next 5 years and after completion of 5 years transfer permission should be given on recovery of 10% or 30% differential premium as per the consumed FSI.

MIDC Circular No. D 00872 dated 11 September 2019 for amendment in Transfer Guidelines (Transfer Process of Industrial Plots) of MIDC Plot in Maharashtra :-

MIDC received many requests for charging STF instead of Differential Premium in scheme of amalgamation, takeover, merger or demerger etc. especially for cases of open plots transfers in which the companies were not affected due to change in shareholding of Directors / Shareholders and also in management of the company.  Following amendments were therefore done by the MIDC for transfer of such open plots:-

 In Scheme of amalgamation, takeover, merger or demerger etc. if there is no change in shareholding of original Directors / Shareholders and also in management of the company, in that case premium will be charged as under:

  1. 2% differential premium if investment is Rs.1,000/- Cr. or Mega Project.
  • 5% differential premium if investment is less than Rs.1,000/- Cr.

NOTES

(* )   Standard Transfer Fee:  Refer MIDC circular No.82 dated 29 September 2009.

Rs.25/- PSM (Minimum Rs.25,000/-) for “A” Class Industrial Area

Rs.20/- PSM (Minimum Rs.20,000/-) for “B” Class Industrial Area

Rs.15/- PSM (Minimum Rs.15,000/-) for “C” Class Industrial Area

Rs.10/- PSM (Minimum Rs.10,000/-) for “D” Class Industrial Area

Rs.5/- PSM (Minimum Rs.5,000/-) for “D+” Class Industrial Area

To know the prevailing MIDC Land rates Click here

(**)  Differential Premium: It is the difference between the current MIDC rates of the plot less the rates prevailing at the time of allotment or last transfer.

To get insight on the Transfer Process and Documentation, Click here

In case you want to know MIDC rules regarding minimum utilisation of FSI please click here

In case you want to know regarding MIDC guidelines on Development period of Plot and Extension of time limit, please click here

Analysis by ASCC

The amendments done by MIDC will help to boost the development of Industrial Sector in Maharashtra.

The MIDC has issued too many circulars over a period of last 25 years. Some of the points of the oldest circulars are still valid and some have been superseded. In order to avoid confusion the MIDC should issue a fresh comprehensive circular on transfer guidelines.

It is seen that many plots in MIDC have not been developed and gone into production due to various difficulties faced by the plot holder. The MIDC should  encourage transfer of any plot which has not been developed and lying open. We feel strongly that 5 years moratorium period should be reduced to Two years and the plot holder should be allowed to transfer the plot after 2 years. The MIDC can charge 30% transfer charges flat on the existing MIDC rates (instead 30% differential premium) for transfer of such open plots and also charge extension charges (if applicable). If MIDC encourages transfer of open plot and reduces the moratorium period to 2 years, we are confident that the inventory of the unutilised plot will be reduced to Nil. It will also give boost to the economy of Maharashtra and employment.

ASCC as Industrial Consultant

The Purpose of writing this document is to share our knowledge in the form of salient features of various transfer guidelines of the MIDC with the readers. You may kindly go through the relevant MIDC circular to know the complete details or get in touch with our company for guidance if any.

 ASCC  is a trusted brand in the industrial consultancy since 2004. ASCC  provides ONE STOP SOLUTION to all  Industrial real estate requirement and management of compliances. Please get in touch with us in case you have any requirement of Industrial Real Estate (Buy- Sell – Lease) or Management of Compliances.

Reach us at :

Ascent Supply Chain Consultants Private Limited (ASCC)
406 Raheja Arcade, Sector-11,CBD Belapur,
Navi Mumbai – 400614, Maharashtra, India
Tel: +91-22-489-74888 (Calls being forwarded on mobile after working hours)
E-Mail : services@ascconline.com

Web: www.ascconline.com

Leave a Reply