Dormant Company

Dormant Company

According to section 455 of Companies Act, 2013 Dormant Company is an inactive company which has not been carrying any business or has not made any significant accounting transaction in the last two financial years.

Such company may make an application to the Registrar for obtaining the status of a dormant company. Concurrently, the Registrar may also suo motu direct such a company for the status of a dormant company. The Registrar on consideration of the application allow the status of a dormant company to the applicant and issue a certificate in Form MSC-1&2 to that effect. The Registrar shall maintain a register of Dormant Companies under the portal maintained by the Ministry of Corporate Affairs.

A company, once identified as dormant, will need to maintain only a minimum number of Directors and pay some annual fees as prescribed in the Companies (Registration Offices and Fees) Rules, 2014.

Such companies could be restarted at a later stage, without actually going through the administrative process of closing down the existing company by making an application. The dormant companies can become active by, making an application.

The Ministry had introduced Easy Exit Schemes, 2010 and 2011 for companies that were inactive on or after 1st April, 2008. In July, Guidelines were issued for ‘Fast Track Exit Mode’ for simplified exit of defunct companies that have been inactive since their incorporation or for 1 year.

If the Dormant Company fails to comply with the requirements of the Section 455 of the Companies Act, 2013 the Registrar shall have the power to strike off its name.

 CONDITIONS FOR OBTAINING STATUS OF DORMANT COMPANY

A company shall be eligible to apply for status of dormant company only, if-

  1. No inspection, inquiry or investigation has been ordered or taken up or carried out against the company.
  2. No prosecution has been initiated and pending against the company under any law.
  3. The company is neither having any public deposits which are outstanding nor is the company in default in payment thereof or interest thereon.
  4. The company is not having any outstanding loan, whether secured or unsecured. if there is any outstanding unsecured loan, the company may apply after obtaining concurrence of the lender and enclosing the same with Form MSC-1.
  5. There is no dispute in the management or ownership of the company and a certificate in this regard is enclosed with Form MSC-1.
  6. 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.
  7. The company has not defaulted in the payment of workmen’s dues.
  8. The securities of the company are not listed on any stock exchange within or outside India.

 PROCEDURE FOR OBTAINING STATUS OF DORMANT COMPANY

  1. A company may make an application in Form MSC-1 along with such fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 to the Registrar for obtaining the status of a Dormant Company in accordance with the provisions of section 455 after passing a special resolution to this effect 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).
  2. 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.
  3. The Register maintained under the portal maintained by the Ministry of Corporate Affairs on its web-site www.mca.gov.in or any other website notified by the Central Government, shall be the register for dormant companies.
  4. 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 of the Act in relation to the rotation of auditors shall not apply on dormant companies.
  5. A dormant company shall file a “Return of Dormant Company” annually, inter-alia, indicating financial position duly 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 30 days from the end of each financial year:
  6. The 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.
  7. An application, for obtaining the status of an active company shall be made in Form MSC-4 along with fees as provided in the Companies (Registration Offices and Fees) Rules, 2014 and shall be accompanied by 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.
  8. The Registrar shall initiate the process of striking off the name of the company if the company remains as a dormant company for a period of consecutive five years.
  9. 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.
  10. When a dormant company does or omits to do any act mentioned in the Grounds of application in Form MSC-1 submitted to Registrar for obtaining the status of dormant company, affecting its status of dormant company, the directors shall within 7 days from such event, file an application, for obtaining the status of an active company.
  11. Where the Registrar has reasonable cause to believe that any company registered as ‘dormant company’ under his jurisdiction has been functioning in any manner, directly or indirectly, he may initiate the proceedings for enquiry under section 206 of the Act and if, after giving a reasonable opportunity of being heard to the company in this regard, it is found that the company has actually been functioning, the Registrar may remove the name of such company from register of dormant companies and treat it as an active company.

 APPLICATION SEEKING STATUS OF AN ACTIVE COMPANY

  • (1) An application, under section 455, for obtaining the status of an active company shall be made in Form MSC-4 along with fees as provided in the Companies (Registration Offices and Fees) Rules, 2014 and shall be accompanied by 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.
  • (2) The Registrar shall initiate the process of striking off the name of the company if the company remains as a dormant company for a period of consecutive five years.
  • (3) 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
  • (4) When a dormant company does or omits to do any act mentioned in the Grounds of application in Form MSC-1 submitted to Registrar for obtaining the status of dormant company, affecting its status of dormant company, the directors shall within seven days from such event, file an application, for obtaining the status of an active company.
  • (5) When the Registrar has reasonable cause to believe that any company registered as ‘Dormant Company’ under his jurisdiction has been functioning in any manner, directly or indirectly, he may initiate the proceedings for enquiry under section 206 of the Act and if, after giving a reasonable opportunity of being heard to the company in this regard, it is found that the company has actually been functioning, the Registrar may remove the name of such company from register of dormant companies and treat it as an active company.

 

Leave a Reply

Your email address will not be published. Required fields are marked *