Dormant Company – Section 455 – Companies Act 2013

Article explains How to Voluntarily Obtain Status of Dormant Company-Steps, Company Which can be declared Dormant By Registrar, Steps to apply for ACTIVE COMPANY Status by Dormant Company, Documents required for obtaining status of Dormant Company, Compliances to be done by a Company after Obtaining Status of Dormant Company and Companies  eligible to apply for Obtaining Status of Dormant Company.

1. How to Voluntarily Obtain Status of Dormant Company-Steps

A company or an inactive company* that has not made any significant accounting transaction** can file an application to the Registrar in a prescribed manner to obtain the status of a dormant company. A Dormant company:

• Can apply to revert to an active status company by filing Form MSC-4.
• Cannot remain with the status of a Dormant Company for more than five consecutive financial years, 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.

*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 transactions would mean transactions other than the basic procedural transactions i.e the payment of fees by a company to the Registrar and also payments to fulfil the requirements of this Act or any other law, allotment of shares to fulfil the requirements of this Act and payments for maintenance of its office and records.

STEP-1:

A Company may make an application for obtaining the Status of Dormant Company to Registrar in Form MSC-1 on payment of such fees as provided in Companies (Registration Offices and Fees) Rules, 2014, 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).

STEP-2:

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.

STEP-3:

The Company can check the status in the register of dormant company maintained by Registrar.

2. Company Which can be declared Dormant By Registrar

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.

3. Steps to apply for ACTIVE COMPANY Status by Dormant Company

STEP-1:

A Dormant Company may make an application for obtaining the Status of Active Company to Registrar in Form MSC-4 on payment of such fees as provided in Companies (Registration Offices and Fees) Rules, 2014 and application 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.

STEP-2:

The Registrar shall, after considering the application filed in Form MSC-4, issue a certificate in Form MSC-5 allowing the status of Active Company to the applicant.

4.  Documents required for obtaining status of Dormant Company:

• Certified true copy of board resolution authorizing making of this application.
• Certified true copy of special resolution authorizing for obtaining dormant status, to be filed with the registrar in Form MGT-14.
• Auditor’s certificate
• Statement of affairs duly certified by Chartered Accountant or Auditor(s) of the company
• Copy of approval or no objection certificate (NOC) from the regulatory authority in case company is regulated by such authority
• Latest financial statement and annual return of the company is mandatory to attach in case the same is filed to Registrar
• Consent of the lender if any loan is outstanding
• Certificate regarding no dispute in the management or ownership

5. Compliances to be done by a Company after Obtaining Status of Dormant Company:

1. A Dormant Company shall maintain Minimum Number of Directors.

2. A Dormant Company shall file a “Return of Dormant Company” audited by Chartered Accountant in practice in Form MSC-3 within thirty days from the end of the each Financial Year.

3. As per Section 173(5), A Dormant Company is required to convene at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than ninety days.

6. Companies  eligible to apply for Obtaining Status of Dormant Company 

The Company Shall be eligible to apply for Obtaining Status of Dormant Company only if-

• 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 the company is in default in payment thereof or interest thereon;
• 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 only 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 workmen’s dues;
• The securities of the company are not listed on any stock exchange within or outside India.