Upgrad LLM

query on msmed act 2006

Company Secretary

Dear friends,

 

A unit has to get registered under Micro, Small & Medium Enterprises Development Act 2006 depending upon the amount of investment in machinery & other equipments.  It will be treated as micro (upto Rs.25 lacs), small (25 lacs to 5 crores) or medium enterprise (5 crores to 10 crores) accordingly. 

 

A company has 5 factories at different locations in the State.  Now the question is the ceiling for investment as above will be considered for one particular factory only or for all factories taken together, i.e. at the company level.  Prior to this Act coming into force, government had issued a notification under Industries (Development & Regulation) Act stating that investment for all units will be clubbed for this purpose.  However, I have not come across such circular or notification under MSMED Act.  Kindly clarify with supporting circular if any.

 

Thanks in advance.

 
Reply   
 
Managing Director

Hi,

As per the recent RBI circular on this matter which i am reproducing here under, it appears that clubbing of units for this purpose is not envisaged by the MSMED Act - 2006. The Union Govt. was asked for a clarification in 2007 which still remains unanswered.

 

Trust this helps,

 

Jagannath

 

RBI/2010-11/305
RPCD.SME & NFS.BC.No. 35 /06.02.31 (P)/2010-11 

 

December 6, 2010



To,
The Chairman / Managing Director
All Scheduled Commercial Banks

(excluding RRBs)

Madam / Dear Sir 



Ownership of units – Two or more undertakings under the same ownership – Status of the unit


Please refer to our circular RPCD.No.PLNFS.No.BC.67/06.03.01/93-94 dated November 22, 1993 on the captioned subject (copy enclosed) wherein banks were advised to follow the guidelines outlined in Notification No. S.O.2 (E) dated 1 January 1993 issued by Government of India, Ministry of Industry for the purpose of determining Small Scale Industries status of the units.


2. As the MSMED Act, 2006 does not provide for clubbing of investments of different enterprises set up by the same person / company for the purpose of classification as micro, small and medium enterprises, Government of India, vide office memorandum No.5(10)2007 MSME/POL dated April 15, 2009, have intimated that the provision, as notified in Gazette Notification No. S.O.2 (E) dated 1 January 1993, of clubbing of investments of two or more enterprises under the same ownership for the purpose of classification of industrial undertakings as SSI (further notified in the principal notification No. S.O.857 (E) dated December 10, 1997), has been rescinded vide Notification No. S.O.563 (E) dated February 27, 2009. Copies of the Notifications are enclosed. 



3. You are advised to issue suitable instructions to your branches / controlling office and accord wide publicity to the same.




Yours faithfully
(B.P. Vijayendra)
Chief General Manager
Encl: as above

 
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Company Secretary

Thank you very much.

 

 
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