1. Introduction

As per Section 455 of 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.

Significant Accounting Transaction: “Significant Accounting Transaction” means any transaction other than–

• Payment of Fees by a company to the Registrar;
• Payments made by it to fulfill the requirements of this Act or any other law;
• Allotment of shares to fulfill the requirements of this Act; and
• Payments for maintenance of its office and records.

Above Mention Transactions are excluded from Significant Accounting Transactions. If a company has made above mention transactions in last two year then also that company will fall under definition of Inactive Company. 

Inactive 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,
• has not filed Financial Statements and Annual Returns during the last two financial years.

Financial Statement: The term “Financial Statement” as per section 2(40) means:

• Balance-Sheet at the end of Financial year;
• Profit & Loss Account or Income or Expenditure account, as may be applicable;
• Cash Flow for the Financial year; and
• Explanatory note attached to any document in sub-clause (i) or (ii) above.

As per Sub-Section (4) Section 455:  where a company not filed or fails to file financial statements or annual return for two financial year consecutively, the Registrar of Company shall issue a notice to that company and enter the name of such company in register maintain for Dormant Company.

2. Conditions for applying for dormancy

Before applying for Status of Dormant Company following conditions are required to be fulfilled:

• No inspection, inquiry or investigation has been ordered or taken up or carried out against the company;
• The company is neither having any public deposits which are outstanding nor is the company in default in payment thereof or interest thereon;
• No prosecution has been initiated or pending against the company under any law;
• The company has not defaulted in the payment of workmen’s dues;
• 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 application has not been made with an objective to deceive the creditors or to defraud any other person;
• The securities of the company are not listed on any stock exchange within or outside India;
• The company is not having any outstanding loan, whether Secured and Unsecured- But if company has any Outstanding Unsecured Loan then the company may apply for status of dormant only after obtaining NOC from the lender. Such NOC required to be attached in the Form which require to file with ROC.
• There is No Dispute in the Management or Ownership of The Company; A certificate in this regard required to taken from Management. Such Certificate required to be attached in the Form which require to file with ROC.

3. Process for Obtaining Status of Dormant Company

• Call a Board Meeting- to call EGM.
• Authorization to director to make application for Dormant with ROC.
• Issue Notice of General Meeting
• Engage an Auditor/ Chartered Accountant to issue certificate.
• Hold Extra Ordinary General Meeting
• Pass Special Resolution (Consent of 3/4th shareholders required.)
• File E-form MGT-14 with ROC.

Attachments:

• CTC of Special Resolution.
• Notice of EGM along with Explanatory Statement.
• After filling of form MGT-14, File Form MSC-1with the ROC.

Attachments:

• CTC of Board Resolution.
• CTC of Special Resolution.
• Auditor’s Certificate.
• Statement of Affairs duly certified by Chartered Accountant or Auditor(s) of the company.
• Latest Financial Statement and Annual Return of the Company is mandatory to attach in case the same is filed to Registrar.
• Certificate regarding no dispute in the management or ownership
• Consent of lender, if any loan is outstanding.
• The Companies (Registration Offices and Fees) Rules, 2014

Fees need to be paid as per the following manner:

• Certificate: A system generated Certificate of status of a Dormant Company is issued by Registrar and sent to the user as an attachment to the email, after approval is granted. Once the form is approved the status of the company shall be changed to ‘Dormant under section 455’.

4. Forms Required to be Filed with ROC after Status of Dormant:

After Getting certificate of Dormant Company, Forms which company can file with ROC are:

• A dormant company shall file a declaration annually in Form No. MSC-3 within thirty days from the end of each financial year.
• Company shall continue to file the return or returns 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.
• If company wants to get Active status to be file e-form MSC-4 with ROC, then gets active company status.
• If company carrying any “Significant transaction” during the dormant period, the directors shall within 7 days from such event, file an application with ROC in e-form MSC-4, for obtaining the status of an active company.

5. The Company may carry following business transactions in the period of Dormant:

• Payment of fees by a company to the Registrar;
• Payments made by it to fulfill the requirements of this Act or any other Law;
• Allotment of shares to fulfill the requirements of this Act; and
• Payments for maintenance of its office and records.

6. Other Provisions:

• A dormant company shall have such Minimum Number of Directors. {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}
• File such documents and pay such annual fee as may be prescribed to the Registrar to retain its dormant status.
• A Dormant Company need not enclose cash flow statements in its annual accounts.
• 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.