Dormant Company

Dormant Company in Brief

A Company which is not active & one which has no

Meaning transactions for a minimum of 2 years

To retain the status of a company, when there is

no transaction
Purpose

To identify & keep a track of

Importance
dormant companies

It is a first of its kind concept in India, where a company which is not active is
legally identified & allowed to exist. The act has not defined a dormant
company in its definition clause. However, a definition can be found in section
455 of the Companies Act, 2013 which defines Dormant Company in a very
oblique manner.

Legal Definition
Section 455 of the Companies Act 2013 defines Dormant Company as below.

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 "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.
Here Inactive Company means, a
company which has not been carrying
In simple terms, a dormant
on any business or operation, or has
company is one which can be
not made any significant accounting
formed for a future project
transaction during the last two
without any significant
financial years, or has not filed
accounting transactions i.e.
financial statements and annual
an Inactive company.
returns during the last two financial
years.

Significant Accounting Transactions

The transactions are defined under the act to avoid any confusions. Significant
Accounting Transactions means any transaction other than:
other than

payment of fees by a company to a registrar

payment made to fulfill legal requirements under the act

allotment of shares made to fulfill requirement under the act

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When is a company recognized as Dormant?

Dormant Company

Self
Recognised by the ROC
Acclaimed

No Significant No Annual
Provide an
Accounting policies filings for last 2
application
for last 2 years years

Process of getting the status of Dormant Company

1. Pass a special resolution for obtaining status of

Dormant Company

2. File an application is form MSC-1 with

prescribed fees

3. Proving that the company satisfies the conditions

laid down for a Dormant company
4. Registrar will enter the company's name
in the dormant register maintained

Get the status of Dormant company

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 Compliance for a dormant company

Continue with Minimum number of

Directors

File MSC-3 indicating the financial

position

Get the financial positions audited by a

Chartered Accountant, without
applicability of Rotation of Auditors

Revocation of status
Status of Dormant Company can be converted to active status, for which the
company has to file MSC-4 annexing the form MSC-3 filled to acquire the status.
After due scrutiny, Registrar will revoke the dormant status of the company.

Prepared by: Nitin Inamdar We are happy to help you:

Reviewed By: Shobha Acharya Contact:

Ankith Shetty +91 9980731897

ankit@bcshettyco.com

Disclaimer: information contained herein is for informational purposes only and should not be considered for any
particular instance or individual or entity. We have obtained information from publicly available sources, there can be no
guarantee that such information is accurate as of the date it is received or it will continue to be accurate in future. No one
should act on such information without obtaining professional advice after thorough examination of the particular
situation.

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