An Analysis on the

“Dormant Company”
 Proprietor ‘s Profile at a Glance
Navneet K. Arora & Co., Company Secretaries
BASIC DETAILS

 Name of the Proprietor – CS Navneet Arora

 Year of Passing of ICSI Final Examination – June 1990
 Date of becoming Associate Member of ICSI (ACS - 8421) – 3rd March 1992
 Date of becoming Fellow Member of ICSI (FCS - 3214) – 21st July 1997
 Date of holding Certificate of Practice (CP - 3005) – 20th November 1998
 Experience (No. of Years) – 25 Years (15 Years in Practice)

EDUCATIONAL QUALIFICATION:

 Master of Commerce.
 Fellow Member of The Institute of Company Secretaries of India
 Post Graduate Diploma in Financial Management
PROFESSIONAL ASSOCIATION / RECOGNITION / MEMBERSHIP OF CONFEDERATION BODIES:

 Member - All India Management Association New Delhi (AIMA).

 Professional Member - PHD Chamber of Commerce and Industries, New Delhi.
 Appointed as Peer Reviewer by ICSI to conduct peer review of Practicing Member of ICSI.
 ICSI Certified participant of National Workshop on Diligence Report for Banks.
 Convener South Delhi Study Group of NIRC of the ICSI -2011, 2012, 2013 & 2014. Also Past Governing
Body Member of Kanpur Chapter of NIRC of the ICSI & Past Member of various Professional Development
Committee of NIRC of the ICSI.
 Regular Participant, Speaker of Seminars / Workshop on the Professional Development Program of
various Professional Management Institutes including Institute of Company Secretaries of India (ICSI), Asia
Pacific Institute of Management (AIM), National Foundation for Corporate Governance (NFCG) etc.
 An Overview of Dormant Company

 This is a new Concept under the Companies Act, 2013

 A Company is Dormant if it has no Significant Accounting Transaction during the Accounting Period.
A Significant Accounting Transaction is one which the Company should enter in its accounting
records.

 When a Company is formed for a future project or to hold an asset or intellectual property and has
no significant accounting transaction that kind of Company may be incorporated as the Dormant
Company under the Companies Act, 2013.

 Section 455 of the Companies Act, 2013 and Companies (Miscellaneous) Rules, 2014 specify the
law and procedure regarding the Dormant Company.
 Meaning of Dormant Company
 Extract of the relevant provisions prescribed in Section 455 of the Companies Act, 2013 as
under :-

 Where a Company is formed and registered under this Act for a future project or to hold
an asset or intellectual property and has no significant accounting transaction, such a
company or an inactive company may make an application to the Registrar for obtaining
the status of a dormant company.
 Inactive Company means a company which has not been carrying on any business or
operation, or has not made any significant accounting transaction during the last two
financial years, or has not filed financial statements and annual returns during the last
two financial years
 Significant accounting transaction means any transaction other than, (a) payment of fees
by a company to the Registrar, (b) payments made by it to fulfil the requirements of this
Act or any other law, (c) allotment of shares to fulfil the requirements of this Act and, (d)
payments for maintenance of its office and records.
 A Dormant Company shall have such minimum number of directors, file such documents
and pay such annual fee to the Registrar to retain its dormant status in the register and
may become an active company on an application made in this behalf.

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 Obtaining status of Dormant Company
 Relevant Rules in the Companies (Miscellaneous) Rules, 2014 as under :-

 A Company may make an application in Form MSC-1 to the Registrar for obtaining the
status of a Dormant Company in accordance with the provisions of Section 455 after
passing a special resolution to this effect in the general meeting of the company or after
issuing a notice to all the shareholders of the company for this purpose and obtaining
consent of at least 3/4th shareholders (in value)
 Provided that a company shall be eligible to apply under this rule only, if
(i) no inspection, inquiry or investigation has been ordered or taken up or carried out
against the company
(ii) no prosecution has been initiated and pending against the company under any law
(iii) the Company is neither having any public deposits which are outstanding nor the
company is in default in payment thereof or interest thereon
(iv) the company is not having any outstanding loan, whether secured or unsecured
(v) there is no dispute in the management or ownership of the company and a
certificate in this regard
(vi) the Company does not have any outstanding statutory taxes, dues, duties etc.
payable to the Central Government or any State Government or local authorities etc.;
(vii) the company has not defaulted in the payment of workmen’s dues;
(viii) the securities of the Company are not listed on any stock exchange within or
outside India. 5
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 Minimum number of Directors &
Return of Dormant Companies
 Relevant Rules in the Companies (Miscellaneous) Rules, 2014 as under :-

 Minimum number of Directors

 A dormant company shall have a minimum number of three directors in case of a public
company, two directors in case of a private company and one director in case of a One
Person Company.

 Provided that the provisions of the Act in relation to the rotation of auditors shall not
apply on dormant companies.

 Return of Dormant Company

 A dormant company shall file a Return of Dormant Company annually, inter-alia,
indicating financial position duly audited by a chartered accountant in practice in Form
MSC- 3 within a period of thirty days from the end of each financial year.

 Provided that the company shall continue to file the return or returns of allotment and
change in directors in the manner and within the time specified in the Act, whenever the
company allots any security to any person or there is any change in the directors of the
company. 6
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Application for seeking status of an active
company
 Relevant Rules in the Companies (Miscellaneous) Rules, 2014 as under :-

 An application, under sub-section (5) of section 455, for obtaining the status of an active
company shall be made in Form MSC-4 and shall be accompanied by a return in Form MSC-3
in respect of the financial year in which the application for obtaining the status of an active
company is being filed.
 Provided that the Registrar shall initiate the process of striking off the name of the
company if the company remains as a dormant company for a period of consecutive five
years
 Where a dormant company does or omits to do any act mentioned in the Grounds of
application in Form MSC-1 submitted to Registrar for obtaining the status of dormant
company, affecting its status of dormant company, the directors shall within seven days
from such event, file an application, under sub-rule (1) of this rule, for obtaining the
status of an active company.
 Where the Registrar has reasonable cause to believe that any company registered as
‘dormant company’ under his jurisdiction has been functioning in any manner, directly or
indirectly, he may initiate the proceedings for enquiry under section 206 of the Act and if,
after giving a reasonable opportunity of being heard to the company in this regard, it is
found that the company has actually been functioning, the Registrar may remove the
name of such company from register of dormant companies and treat it as an active
Company. 7
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 Form to be filed
 MSC 1 :- Application for obtaining status of dormant company, certificate that there is no
dispute in the management or ownership of the company, there is any outstanding unsecured
loan obtaining concurrence of the lender.
 MSC 2 :- Certificate allowing the status of a Dormant Company.
 MSC 3 :- Return of dormant companies
 MSC 4 :- Application for seeking status of an active company
 MSC 5 :- Certificate allowing the status of an active company to the applicant

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