Date | May 15, 2017:
Apex industry body ASSOCHAM has reiterated its plea with Ministry of Mines seeking exemption from blanket levy of charges on any transfer of captive mining lease obtained otherwise than through auction, without any exemption on such levies on transfers within group companies, where the effective management control of mining lease does not change. "Our member companies are delaying intra-group restructuring, in absence of any clarity on transfer and imposition of transfer levy between group companies," said secretary general of ASSOCHAM D S Rawat, in a communication addressed to Union Ministry of Mines secretary Arun Kumar. Which, he said otherwise could have resulted amongst others in consolidation of business operations, synergies, unlocking shareholders value and above all better corporate governance structure. ASSOCHAM is rest assured that government policies would not stand in the way of such benefits arising out of intra group restructuring and would implement changes clarifying the term, 'transfer of mining leases for mines alienated otherwise than through auction,' exempting imposition of charges in transfers wherein effective control of mining lease does not change. Previously in its request letter dated December 14, 2016, the chamber highlighted that the Mines and Minerals (Development and Regulation) Amendment Act, 2016 facilitated banks and financial institutions in liquidating stressed assets together with sale of units/assets by regulatory orders or otherwise. However, a blanket levy of transfer charge on any transfer of captive mining lease obtained otherwise through auction, without any exemption ins a cause for concern for industries which hold and depend on captive mines for their continued operations. As such lack of any specific exemptions in the scope of transfer as referred to in the current law prevents the stakeholders from undertaking transfers of mining leases even within their own group entities whether by way of restructuring or undertaking mergers and amalgamations or otherwise. It noted that manufacturing units with captive mines operate such units through various subsidiary companies. "Such companies falling within the same group structure often undertake corporate restructuring for the purposes like consolidation of business and operations, achieving synergies in operations, simplification of group structures, unlocking shareholder value, achieving greater economies of scale, reduction of shareholder tiers and better corporate governance structure." ASSOCHAM also highlighted certain positive outcomes of an exemption in levy of charges to transfers within group companies where effective management control of mining lease does not change. Some of these positive externalities are - consolidation of companies and simplification of multi-layered structures relating to the same; promotion of goal of restricting extremely complicated corporate holding structures; assist in making effective owners also actual owners of operating company thereby increasing its accountability and oversight; reduction of ambiguity in regulatory framework; ease of doing business and better allocation of resources within the group companies. ASSOCHAM had also highlighted that a blanket levy of transfer charges on any incident of transfer not only impacts the operation of captive mines, but also on cement, steel and other such industries that are reliant on captive mines for their own continued operation, development of critical infrastructure and growth of the economy. As such with a view to facilitate ease of doing business and to ensure efficient allocation of resources, ASSOCHAM had urged the Centre to amend the Mineral Rules 2016 to provide that transfer of captive mining leases within the group companies where there is no change in the effective control and management should be freely permissible and not subject to a levy of transfer charge. It also suggested that to obviate any ambiguity in this regard, the exemption may be based on a shareholding threshold.
(Source: http://news.webindia123.com/)