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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
Here Inactive Company means, a
registered under this Act for a future
company which has not been carrying
project or to hold an asset or In simple terms, a dormant
on any business or operation, or has
intellectual property and has no company is one which can be
not made any significant accounting
significant accounting transaction, formed for a future project
transaction during the last two
such a company or an inactive without any significant
financial years, or has not filed
company may make an application to accounting transactions i.e.
financial statements and annual
the Registrar in such manner as may an Inactive company.
returns during the last two financial
be prescribed for obtaining the status
years.
of a dormant company.

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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