“Majority Rights“ under Section 15 of RERA Stands Clarified By Maharashtra Real Estate Regulatory Authority for Financial Institutions and Creditors
With the powers of General Superintendence vested in him under Section 25 of the Real Estate (Regulation and Development) Act, 2016, the Maharashtra Real Estate Regulatory Authority brought in a clarity regarding the implication of Section 15 of the RERA, 2016 via Circular No. 11/2017 dated 08.11.2017.
Section 15 of the act states:
“The promoter shall not transfer or assign his majority rights and liabilities in respect of a real estate project to a third party without obtaining prior written consent from two-third allottees, except the promoter, and without the prior written approval of the Authority.”
There was an uncertainty regarding the term “majority rights” under Section 15 of the Act. Clarity was required whether in certain situations such as change in internal share holding, change in the promoter’s organization type, Merger and Acquisition, Mortgage enforcement would require the consent of the allottees and approval of the authority.
The ambiguities have been cleared by the MAHA Regulatory Authority in the following manner:
Internal Shareholding: Such changes do not affect the rights and obligations of the Allottees with respect to the promoter’s organizations. Hence, the 2/3rd consent of allottees would not be required for the same.
Conversion: In the below mentioned cases, no 2/3rd consent of the allottees will be required.
Partnership firm to LLP or private Limited Company.
Private limited Company or unlisted company to an LLP or otherwise.
Proprietorship change by succession to legal heirs.