Who can apply for the status of a Dormant Company?
- A company incorporated and registered under Companies Act, 2013 for future project or to hold an asset or Intellectual property and has no significant accounting transaction.
- An Inactive Company
What is meant by Inactive Company?
- Company which has not been carrying on any business or operation.
- Has not made any significant accounting transaction during the last 2 financial years.
- Has not filed financial statements and annual returns during the last 2 financial years.
What do you mean by Significant accounting transaction?
Transaction other than the following –
- Payment fees to RoC
- Payment made to fulfill the requirements of this Act or other law
- Allotment of shares to fulfill the requirement of this Act
- Maintenance payment towards office and records.
Which Company is eligible to make application for obtaining the status of Dormant Company?
- 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.
- Company is not having any outstanding Public Deposits nor defaulted in payment of interest thereof.
- Company is not having outstanding secured loan. However if the company is having outstanding unsecured loan, it may apply to obtain the status of Dormant Company subject to following –
- No dispute in the management or ownership of the company and certification in this effect is enclosed in Form MSC 1.
- No outstanding statutory taxes, dues, duties etc. payable to Government or Local authority,
- Not defaulted in the payment of workmen’s dues.
- Company is not listed on any Stock Exchange within or outside India.
Procedure to make application for the obtaining the status of Dormant Company –
- Company to pass Special Resolution
- Make application to Roc in Form MSC 1
- RoC to issue certificate in Form MSC 2 allowing the status of Dormant Company.
- Where the Company has not filed Financial Statements or Annual return for 2 Financial Years consecutively then RoC shall issue notice to the company and enter the name of the company in Register of Dormant Company.
- Dormant Company is required comply with the following –
- Minimum number of Directors on the Board.
- File Return of Dormant Company in Form MSC 3 within a period of 30 days from the end of the Financial Year.
- Whenever company allots any security or there is any change in directors, then the company is required to file respective forms.
Procedure to make application for obtaining the status of Active Company –
- Make application in Form MSC 4 for obtaining the status of the Active Company along with Return Form MSC 3 relating to that Financial Year.
- RoC to issue certificate in Form MSC 5 allowing the status of Active Company.
- Where the Company do any act in contravention of “ Grounds of Application” in Form MSC 1 (filed to obtain the status of Dormant Company), then directors shall within 7 days make application to RoC for obtaining the status of Active Company.
- Where RoC has a reasonable cause to believe that the Dormant Company is functioning in any manner, then RoC may remove the name of such Company from Register of Dormant Company and treat it as an Active Company.
If a company remains Dormant for a period of consecutive 5 years, then RoC shall initiate the process to strike off that company.
Author: Hiral Mehta, Associate at M&K Associates and can be reached at [email protected]
Disclaimer: The views, information or opinions expressed herein are compiled by the Legal team of M&K Associates, Company Secretaries, Hyderabad. The above information is solely for disseminating knowledge and private circulation. We are hereby not liable for any loss, damage or inconvenience caused as a result of reliance on such information and we accept no legal liability or other responsibility by or on behalf of any errors, omissions, or statements on this content.