The Companies Act, 2013 has given an opportunity of dormant status to future oriented company or inactive company to remain in existence without being wound up and / or liquidated.
- According to Section 455 of the said Act, where a company is formed for a future project or to hold an asset or intellectual property and has no significant accounting transaction (see explanations), such a company or an inactive company (see explanations) may make an application to the Registrar in “Form MSC - 1” for obtaining the status of a dormant company after passing a special resolution 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). “Form MGT-14” has to be filed in this regard before filing Form MSC-1.
- A company shall be eligible to apply for the status of a dormant company only if-
(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 is the company in default in payment thereof or interest thereon;
(iv) The company is not having any outstanding loan, whether secured or unsecured. If there is any outstanding unsecured loan, the company may apply for the status of a dormant company 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.
- 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.
- Even after obtaining the dormant status,
1.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 related to the rotation of auditors shall not apply on dormant companies).
2.A dormant company shall file annually a “Return of Dormant Company” in “Form MSC-3” within a period of thirty days from the end of each financial year indicating financial position duly audited by a Chartered Accountant in practice. However, the company shall continue to file the return(s) of allotment and change in directors in the manner and within the time specified in the Act, whenever the company allots any security to any person or there is any change in the directors of the company.
- The Registrar shall maintain a register of dormant companies and 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.
- A Dormant Company may become active again on an application to the registrar in “Form MSC-4” along with 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. These forms shall also be filed within seven days if a dormant company does or omits to do any act mentioned in the Grounds of application in Form MSC-1, affecting its status of dormant company. The Registrar shall, after considering the application filed, issue a certificate in “Form MSC-5” allowing the status of an active company to the applicant. However, the Registrar shall initiate the process of striking off the name of the company from the register of dormant companies if the company remains as a dormant company for a period of consecutive five years.
- Explanations –
Inactive company: - 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 :- 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.