Applicable Provisions: Section 455 of the Companies Act, 2013
Where a company is formed and registered for a future project or to hold an asset or intellectual property and has no significant accounting transaction, such company or an inactive company may make an application to the Registrar for obtaining a status of the 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.
Prior to making the application a clean chit is necessary in this regard and thus the below provisions are important:
(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:
Provided that if there is any outstanding unsecured loan, the company may apply under this rule after obtaining concurrence of the lender and enclosing the same with Form MSC-1;
(v) There is no dispute in the management or ownership of the company and a certificate in this regard is enclosed with Form MSC-1;
(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.
PROCEDURE FOR APPLYING FOR THE CERTIFICATE OF DORMANT COMPANY TO REGISTER
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Step |
Particulars |
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1 |
Convene a Board Meeting with two Directors or by a majority of Directors.
Hold the Board meeting and pass the resolution for obtaining the status of Dormant Company.Fix a date, place, and time agenda for a Extra Ordinary General Meeting of the Company. |
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2 |
Issue notices in writing calling for the General Meeting of the Company proposing the resolution, with suitable explanatory statement. |
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3 |
Holding an Extra Ordinary General Meeting and pass the Special Resolution, in the general meeting. |
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4 |
File Form MGT 14 within 30 days of passing the resolution. |
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5 |
Company shall make an application in Form MSC-1 along with such fee as provided in the Companies (Registration Offices and Fees) Rules, 2014. |
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6 |
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. |
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7 |
The Register maintained under the portal maintained by the Ministry of Corporate Affairs on its web-site www.mca.gov.in or any other website notified by the Central Government, shall be the register for dormant companies. |
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8 |
Every company shall file Financial position duly audited by a chartered accountant should be filed within 30 days from the end of financial year in Form MSC 3. |
Key Points:
1. In case of a company which has not filed financial statements or annual returns for two financial years consecutively, the Registrar shall issue a notice to that company and enter the name of such company in the register maintained for dormant companies.
2. A dormant company shall have such minimum number of directors, file such documents and pay such annual fee as may be prescribed to the Registrar to retain its dormant status in the register and may become an active company on an application made in this behalf accompanied by such documents and fee as may be prescribed.
3. The Registrar shall strike off the name of a dormant company from the register of dormant companies, which has failed to comply with the requirements of this section.
Reactivation of a Dormant Company
1. The Dormant Company should make an application for conversion of Dormant Company status into an Active Company in Form MSC-4.
2. The fee as prescribed under Companies (Registration Offices and Fees) Rules, 2014, should also to be paid with an application filed for Conversion of Dormant Company into Active Company. The MSC-4 should be accompanied by the return Form MSC-3 of the Dormant Company.
3. After considering the application filed, the Registrar can approve the application and issue a certificate in Form MSC-5, allowing the status of the Dormant Company to be an Active Company.
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Disclaimer: –The above mentioned article has been based on relevant provisions of Companies Act, 2013 . Under no circumstance, the author shall not liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.
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