Dormant Company Status

Dormant Company Status

Granting the “Dormant Status

This option is suitable when you have registered a company for a future project and hence the company is not operational currently. Also, where an in-operational company cannot be closed as it might be holding assets such as land, building etc. choosing the “dormant status” is a good option.

Let’s understand what’s a Dormant company?

A dormant company is a company which is inactive i.e. a company which has the following characteristics:

  • It has not been carrying on any business or operation
  • It has not made any significant accounting transaction during the last two financial years.
  • It has not filed financial statements and annual returns during the last two financial years.
  • A defaulting Company which has not filed annual returns and financial statements for two years or more.

Procedure for obtaining status of dormant company:

  1. An application must be made in form MSC-1 to get the “Dormant” status.
  1. A special resolution should be passed to authorize the directors to make application for Dormant status. Thus, we need to file E-form MGT-14 with ROC for filing special resolution.
  1. 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.

Advantages of applying for ‘Dormant Status’

There is lesser compliance burden for a dormant company which reduces the costs of maintaining such a company.

‘Dormant Companies’ are exempted from the following compliances:

  • To include cash flow statements in their financial statements.
  • Reduced compliance for holding board meeting in each quarter. These companies are required to hold only two board meetings during the year.
  • These companies do not require to rotate the auditors

Compliances to be met by a dormant company:

  • It shall file a “Return of Dormant Company” each year, indicating financial position which should be audited by a chartered accountant in practice in
  • Form MSC-3 along with such annual fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 within a period of thirty days from the end of each financial year.

Also, note that maximum tenure for which a company can remain dormant is 5 consecutive financial years.

If a company remains dormant for more than 5 years, the Registrar commences the process of striking off the name of the company from the Records, i.e. the company will be removed.

For any further queries related to this or anything else visit TAXAJ

TAXAJ Corporate Services LLP
Address: 1/11, 1st Floor, Sulahkul Vihar, Old Palam Road, Dwarka, Delhi-110078
Contact: 8961228919 ; 8802812345 | E-Mail:
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