Dormant Company Annual Return Filing in India

A Dormant Company is a company registered under Section 455 of the Companies Act, 2013 that has no significant accounting transactions, exists primarily to hold assets or intellectual property, and is formed for a future project. It must obtain a dormant status certificate (Form MSC-2) from the ROC.

As per the Explanation to Section 455, a significant accounting transaction means any transaction other than payment of fees to the ROC, requirements under the Act or rules, allotment of shares to subscribers of the memorandum, and payments for maintaining office and records.

An Inactive Company is simply one that has not conducted business for two years. A Dormant Company is a legally recognised status under Section 455, obtained through a Form MSC-1 application and an MSC-2 certificate from the ROC, with specific compliance benefits.

Form MSC-3 is the Annual Return for Dormant Companies prescribed under Rule 7 of the Companies (Miscellaneous) Rules, 2014. It must be filed within 30 days from the end of each financial year, i.e., by 30th April for companies with a March year-end.

Form MSC-3 requires attachment of the Statement of Financial Position, duly audited by a Chartered Accountant certifying that no significant transactions occurred, along with the auditor’s report, board resolution, and any other declarations as may be applicable.

Yes, a One Person Company can obtain dormant status under Section 455. OPCs also receive a reduced fee structure for Form MSC-3 filings under Section III of the Companies (Registration Offices and Fees) Rules, 2014.

Form MSC-3 must be filed within 30 days from the end of the financial year. For companies with a financial year ending on 31st March, the due date is 30th April of every year as per Rule 7 of the Companies (Miscellaneous) Rules, 2014.

Yes, a statutory audit is mandatory. The Statement of Financial Position attached to Form MSC-3 must be audited and certified by a Chartered Accountant confirming the absence of significant accounting transactions during the financial year.

Yes, once a company obtains dormant status and files Form MSC-3, it is exempted from filing Form AOC-4 (Financial Statements) and Form MGT-7 (Annual Return) as per the simplified compliance regime for dormant companies.

As per Rule 6 of Companies (Miscellaneous) Rules, 2014, a dormant company must hold at least one board meeting in each half of the calendar year, with a minimum gap of 90 days between the two meetings, compared to four meetings required for active companies.

Yes, Form ADT-1 (Appointment of Auditor) must be filed within 15 days of the Annual General Meeting. Dormant companies are not exempt from auditor appointment requirements under Section 139 of the Companies Act, 2013.

Yes, all directors of a dormant company must complete their annual Director KYC compliance through Form DIR-3 KYC or web-based KYC before 30th September each year. This requirement applies regardless of the company’s dormant status.

Fees are based on authorised capital under Section III of Companies (Registration Offices and Fees) Rules, 2014: ₹2,000 (up to ₹25 lakh), ₹5,000 (₹25-50 lakh), ₹10,000 (₹50 lakh-5 crore), ₹15,000 (₹5-10 crore), ₹20,000 (above ₹10 crore). OPC/Small Companies pay reduced fees.

Per G.S.R. 12(E) dated 11.01.2022, additional fees are: 2x (up to 30 days delay), 4x (30-60 days), 6x (60-90 days), 10x (90-180 days), and 12x (beyond 180 days) of the normal filing fee.

A dormant company can hold investments acquired before obtaining dormant status. However, active trading in securities or receiving substantial interest income may be considered significant transactions and could affect eligibility for dormant status.

Yes, a dormant company can hold immovable property acquired before obtaining dormant status. However, buying or selling property during dormancy would constitute a significant accounting transaction and may require reactivation.

Taking commercial loans or credit facilities during dormancy would generally be inconsistent with dormant status, as it constitutes a significant financial transaction. The company should consider reactivation before availing such facilities.

Declaring dividends would typically be inconsistent with dormant status, as it implies the company has profits and is engaging in financial distributions. A dormant company should reactivate before declaring dividends to shareholders.

Non-filing of Form MSC-3 for two consecutive years may lead to strike-off proceedings by the ROC under Section 455(6) read with Section 248 of the Companies Act, 2013. The company may be removed from the register of companies.

As per Section 455(3), a company can remain dormant for a maximum of five consecutive years. After five years, it must either apply for active status or face removal from the register of companies by the ROC.

To reactivate, the company must file Form MSC-4 (Application for Obtaining Status of Active Company) with the ROC along with prescribed fees. The ROC will issue a certificate restoring active status upon satisfaction of requirements.

A dormant company must maintain all statutory registers, including the Register of Members, Register of Directors, Register of Directors’ Shareholding, Minutes Books, and any other registers as required under the Companies Act, 2013.

Auditor rotation provisions under Section 139(2) apply to specified classes of companies (listed companies and certain large unlisted companies based on thresholds). Most dormant companies do not meet these thresholds and are therefore exempt from mandatory rotation.

Non-compliance can result in additional filing fees (up to 12x of normal fees), initiation of strike-off proceedings under Section 248, penalties on directors, and disqualification of directors for future company incorporations.

Yes, filing of Income Tax Return (ITR-6) is mandatory for every company regardless of dormant status under the Companies Act. The ITR must be filed even if it is a nil return showing no income or losses for the financial year.

If the dormant company has an active GST registration, it must file nil GST returns (GSTR-1 and GSTR-3B) for all applicable tax periods. Alternatively, the company may apply to cancel its GST registration if not required.

Yes, a Section 8 Company (licensed for charitable purposes) can apply for dormant status under Section 455 if it meets the eligibility criteria. The same procedure applies to Form MSC-1 and to the annual filing on Form MSC-3.

As per Rule 6 of Companies (Miscellaneous) Rules, 2014, the minimum directors is: three for a Public Company, two for a Private Company, and one for a One Person Company (OPC). This is the same as the requirements for active companies.

A dormant company can maintain its existing bank accounts. Opening a new bank account during dormancy is generally permissible if it is for maintaining office operations, but significant banking transactions would be inconsistent with dormant status.

Filing Form MSC-3 requires coordination between a Chartered Accountant (for audit and certification), Company Secretary or other practising professional (for form certification), and proper digital signatures. Engaging a compliance service provider, such as Setindiabiz, ensures accurate and timely filing.