DORMANT COMPANY

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The Companies Act, 2013 has recognized a new set of companies called as dormant companies.
As per section 455(1) 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 in such
manner as may be prescribed for obtaining the status of a dormant 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
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not filed financial statements and annual returns during the last two financial years
means any transaction other than
a) Payment of fees by a company to the Registrar;

b) Payments made by it to fulfill the requirements of this Act or any other law;
c) Allotment of shares to fulfill the requirements of this Act; and
d) Payments for maintenance of its office and records.
A Company can obtain status as Dormant Company by Suo moto or ROC can declare a
company as Dormant.
Suo-Moto application: A company which Dormant by ROC: In case of a company

meets the above criteria can apply suo-moto which has not filed financial statements or
to Registrar of Companies (ROC) for the annual returns two financial years
status of a Dormant company in Form consecutively, the Registrar may issue a
MSC-1 along with such fee as provided in the notice to such company and enter the name
Companies (Registration Offices and Fees) of such company in the register maintained
Rules, 2014 after complying with the for dormant companies.
provision of Rule 3 of The companies
(Miscellaneous) Rules, 2014 .
The company shall call a board meeting to fix day, date, time and venue for General Meeting
of the members of the company to pass resolution for making application to the ROC to
obtain status of a dormant company
The company shall pass a special resolution for obtaining the status of a dormant company
and authorizing the director(s) to make application to ROC or After issuing a notice to all the
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shareholders of the company for this purpose and obtaining consent of at least 3/4th
shareholders (in value).
After passing the special resolution, the company shall file e-form MGT-14 with ROC for
filing special resolution.
A company may make an application inFormMSC-1 to the Registrar for obtaining the status
of a Dormant Company in accordance with the provisions of section 455
The Registrar shall, after considering the application filed in Form MSC-1, issue a certificate
in Form MSC-2 allowing the status of a Dormant Company to the applicant.
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. The provisions of the Act in relation to the rotation of auditors shall not
apply on dormant companies.
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
No inspection, inquiry or investigation has been ordered or taken up or carried out against the
company.
No prosecution has been initiated and pending against the company under any law.
The company is neither having any public deposits which are outstanding nor is the company
in default in payment thereof or interest thereon.
The company is not having any outstanding loan, whether secured or unsecured. if there is
any outstanding unsecured loan, the company may apply after obtaining concurrence of the
lender and enclosing the same with Form MSC-1.
There is no dispute in the management or ownership of the company and a certificate in this
regard is enclosed with Form MSC-1.
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.
The company has not defaulted in the payment of workmens dues.
The securities of the company are not listed on any stock exchange within or outside India.
1. Financial statements of dormant company may not include the cash flow statement
Dormant company shall be deemed to have complied with the provisions relating to Board
meeting if at least one meeting of the Board of directors has been conducted in each half of
the calendar year and the gap between two meetings is not less than ninety days.
3. Dormant Company is not required to include the statement of cash flow in its financial
statement.
4. The provision of rotation of auditors is not applicable in case of the dormant company.
5. Dormant companies enjoy the advantages of lower statutory compliance cost as there are few
statutory compliances applicable to dormant company as compared to active company
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6. Companies can enjoy the status of dormant company for a period of 5 consecutive years
An application, for obtaining the status of an active company shall be made inForm MSC-4
along with fees as provided in the Companies (Registration Offices and Fees) Rules, 2014
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.
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.
The Registrar shall, after considering the application filed issue a certificate in Form MSC-5
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allowing the status of an active company to the applicant.
When a dormant company does or omits to do any act mentioned in the Grounds of
application in Form MSC-1submitted to Registrar for obtaining the status of dormant
company, affecting its status of dormant company, the directors shall within 7 days from
such event, file an application, 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.
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PEN DRIVES AVAILABLE AT (www.academy99.

in) Page 45 of 623

CS ANOOP JAIN (THE CORPORATE LAW WIZARD)

a) Payment of fees by a company to the Registrar;

Suo-Moto application: A company which Dormant by ROC: In case of a company

CS ANOOP JAIN (THE CORPORATE LAW WIZARD)

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