Skip to content

Dormant Company Status
100% Online Process

A company for a future project or created to hold IPR only with no significant accounting transaction can apply for dormant company status. We assist companies in applying to obtain dormant company status from the ROC.
Google review
Trustpilot Logo

Get in touch with us

Your Information is safe with us

Get Dormant Company Status

If a company is inactive or the operations are on hold for a future project or created to hold immovable property or IPR such as Trademark, Copyright, Patent etc, and does not have any significant accounting transaction may apply for dormant company status. As a dormant company, there are relaxations from several provisions of the companies act.

Overview Of Dormant Company Status

A company incorporated under the Companies Act, 2013, is required to do several compliances under the Company Act and Rules. However, it still requires compliance with various provisions of the companies act. At times a company is registered for a future project, or the Company is not active and does not have significant accounting transactions or is an inactive company. Other kinds of companies are incorporated only to hold or maintain the Intellectual Property Rights of the companies. These companies are, in a sense, inactive and do not do income-generating activities. Under Section 455 of the Companies Act, these companies may apply to the Registrar of Companies for changing the status of the Company from the active Company to a dormant company. As a dormant company, only a few of the provisions of the Companies Act shall apply. In the below section of this page, we will discuss the compliance requirements for a dormant company.
Meaning of Inactive Company:
To make an active company dormant, the term “Inactive Company” means
  1. that the company is not carrying out any business activity or
  2. there is no significant accounting transaction during a period of the last two financial years or
  3. The companies that have not filed the financial statement or annual return to the ROC during the previous two financial years.

Significant Accounting Transactions:
means all transactions other than the transactions.
  1. payments made to ROC or towards fulfilling the requirements under the companies act or any other law applicable to the company.
  2. Transactions relating to allotment of shares
  3. payments towards the maintenance of the office or records.

The benefit of Dormant Company

The inoperative company that does not do any business now can, by converting as a dormant company, continue as a going concern and remain valid as a legal entity for a future project or use. One of the objectives of converting an active company into a dormant company is to reduce the company’s compliance requirements under the Companies Act, 2013. Here is the list of advantages as a dormant company.
Note: When a company acquires the status of “Dormant Company”, it does not affect the debts, liabilities, obligations, or contracts incurred or executed before the date of change of status from an active company to a dormant company.

The conditions to be satisfied before applying for dormant company status

  1. No inspection, inquiry or investigation has been ordered or taken up or carried out against the company or no prosecution has been initiated and pending against the company under any law;
  2. That the company is neither having any public deposits which are outstanding nor the company is in default in payment thereof or interest thereon;
  3. That the company is not having any outstanding loan, whether secured or unsecured and if have, has obtained the concurrence of the lender
  4. That there is no dispute in the management or ownership of the company and 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.;
  5. The company has not defaulted in the payment of workmen’s dues; the securities of the company are not listed on any stock exchange within or outside India.

Stepwise Process To Convert an Active Company as Dormant

Step Wise Process in Chronological Order
STEP 1 – Convene Board Meeting
The Board of Directors shall pass a resolution approving the filing of an application for conversion of the company’s status as Dormant Company in the Board Meeting. The Board shall also authorise one director to act on this behalf and send Notices to all shareholders for the Extra Ordinary General Meeting.
STEP 2 – EGM Notice
Issue appropriate Notice calling the EGM along with an explanatory statement, clearly stating the reasons as to why the Board of directors proposes a change in status of the company and as “Dormant Company”
STEP 3 – CA Certification of Statement of Affairs
While the EGM is scheduled, the authorised director needs to work with the Statutory Auditor or a Chartered Accountant in practice for certification of the Company’s Statement of affairs (Financials).
STEP 4 – Conduct of EGM
On the designated EGM Date, the meeting of shareholders to be conducted per secretarial standards and with the requisite quorum, a Special Resolution approving the filing of an application for conversion of the status from Active to Dormant Company need to be passed.
STEP 5 – Filing of MGT-14
Every special resolution passed in EGM needs to be filed with the Registrar of Companies in the prescribed form MGT-14 with the certified true copy of the resolution along with EGM Notice within 30 days of EGM.
STEP 6 – Application for Change in Status
After the MGT-14 is filed with the ROC, an application in the Form MSC-1 along with the scan copy of all resolutions, declarations, consent of creditors and CA Certificate is filed with the ROC for its approval.
STEP 7 -Change of Status From Active to Dormant Company
The registrar of companies examines the application made in MSC-1 and, if finds it in order, then issues a Certificate in form MSC-2. With the issue of the MSC-2 form the status of the company is changed as Dormant Company

List of Documents Required To Convert as Dormant Company

1. Board Resolution authorising the conversion as Dormant Company
2. Copy of special resolution passed in EGM
3. Copy of memorandum of association/articles of association.
4. Latest financial statement and the annual return of the company.
5. Statement of affairs duly certified by CA or Auditor
6. Consent from the lender if any loan/debt is subsisting.
7. Declaration or Certificates from the Directors of the company.

Applicable ROC Forms & ROC Fee

To acquire status as a Dormant Company following three applications shall be filed to the Registrar of Companies with Prescribed Filing Fee
S.No Form Name Explanation ROC Fee
1.
e-Form - MGT-14
The MGT-14 is filed to the ROC within 30 days of passing a Special Resolution to register the Special Resolution as required under section 117 of the companies act.
Rs. 300/- to Rs 600/-
2.
e-Form - MSC-1
The application for changing the status as Dormant Company is filed to the ROC in e-Form MSC-1 within 30 days of passing of the special resolution for change of status of the company as a dormant company
Depends on the Capital of the Company as per the below table.
Filing Fee for MSC-1 (Application to make a company as Dormant Company
S.No Authorised Capital Other than OPC or Small Company OPC or Small Company
1.
Up to Rs. 25,00,000/-
Rs. 2,000/-
Rs. 1,000/-
2.
Rs. 25,00,001 To 50,00,000/-
Rs. 5000/-
Rs. 2,500/-
3.
Rs. 50,00,001 To Rs 5 Crores
Rs. 10,000/-
N/A
4.
Rs 5 Crores to Rs 10 Crores
Rs. 15,000/-
N/A
5.
Above Rs. 10 Crores
Rs. 20,000/-
N/A

Regular Compliance

The companies convert as Dormant to hold property, Intellectual Property Rights or to be utilised for a future business. For example, a real estate developer may buy land for future projects. As a dormant company, ensure that the company meets minimum compliance to following after it has acquired the Dormant Company Status.

Minimum Number of Directors

While a company is on Dormant Status, it should meet the requirements of a minimum number of directors all the time under the Companies Act, 2013. The minimum number of required directors as per the company type is as under

  • Public Limited Company : 3 Director
  • Public Limited Company : 2 Director
  • One Person Company: 1 Director

Board Meeting

Even when the company is dormant, the Board of Directors needs to meet at least once every six months.

Return of Allotment

If the dormant company allots new shares while the company is under Dormant Status, it shall continue to file Return of Allotment in PAS-3 Form.

Registered Address

Even if it has acquired dormant status, the company shall continue to maintain its registered office so that the communication from the government departments and other stakeholders is received and responded to.

Annual Return of Dormant Company

There is a myth surrounding the status of the Dormant Company; there are people who believe that by converting as a Dormant Company, they don’t have to do anything concerning compliance. Though there is relaxation with respect to several provisions of the companies act, it does not mean that the company does not have to do annual compliance for a dormant company. There are four constituents of annual compliance, such as accounting, statutory audit, ITR filing, and ROC Returns. We shall be discussing each aspect separately below.
Accounting & Preparation of Financial Statements: The dormant company must maintain the records and conduct half-yearly board meetings. The Registered Address of the company is also to be maintained. Thus there would be debit entries in the books of account on account of administrative expenses. Hence even if the company has acquired dormant company status, it still needs to do accounting and prepare the financial statement of the company
Statutory Audit: Though there is relaxation to auditor rotation, the statutory audit of the financial statement of the dormant company is still required. Hence the company must prepare its books properly with supporting documents of its expenses and get the statutory audit done for the company.
TAX Returns: The filing of TDS, GST Returns applies to dormant companies as well. The Income Tax Return has to be filed for the dormant company, just like it is filed for an active company.
ROC Filing: With respect to the annual ROC Filing, there is significant relaxation as the dormant company has to file a simplified Annual ROC Return in form MSC-3 indicating the financial position of the company duly certified by a Chartered Accountant in practice, within 30 days from the end of each financial year with the ROC

Get Started

SETINDIABIZ - DELHI
4.7
Based on 701 reviews
powered by Google
Nishant kumarNishant kumar
07:29 28 Oct 22
Registration no more a tedious task with setindibiz.All process are simplified.Just sign some documents and get you establishment registered.
Sandeep KumarSandeep Kumar
05:23 30 Sep 22
A good platform for small businesses. They have professional team which helps since inception to all the tax compliance.
Rachit JainRachit Jain
13:48 12 Aug 22
Absolutely great service, professional is all aspects, good guidance and follow up, helped me get my startup recognition in no time. Totally recommend their services.
shyam kumarshyam kumar
08:54 12 Jul 22
Applied for startup recognition certificate, work done in scheduled time with good coordination of teamThank u
khushalkj jainkhushalkj jain
12:59 24 Mar 22
Shubendu was good, in explaining what would work well for us in terms of company registration and overall process was smooth.Giving 4 star as i had to followup on a couple of occasions , otherwise all good.
MakeMyRender 3DMakeMyRender 3D
11:47 15 Mar 22
I'm very happy to apply my Company Registration with Setindiabiz.Below are the reasons:Very ProfessionalEverything was done as per committedYou get every help when you need.All the coordinator was very proactiveAll my appreciation and a big thank you to the team from Setindiabiz.
Anil NagpalAnil Nagpal
02:08 05 Mar 22
I have interacted with Mr. Sushant on our day-to-day work with SETINDIABIZ and he is amazing gentleman. Quick response and soft spoken are his great strengths. I enjoy interacting with him.
rapoliitrapoliit
11:04 02 Mar 22
I am happy with flawless work. ease of accomplishing . In time delivery. I am still IN for their services.
poonam sharmapoonam sharma
10:05 28 Feb 22
Very helpful and responsive. Good job by Ms Bhavika.
Siddharth GuhaSiddharth Guha
07:04 26 Feb 22
Timely Service and reminders provided along with proactive assistance in all matters of financial accounting.
Jaibir LohoknaJaibir Lohokna
02:04 25 Feb 22
Extremely responsive great team. I had a wonderful experience. The team kept me updated of every action and executed the task expeditiously. I wish Ms Misba from SetIndiaBiz and her team all the very best in every future endeavours of theirs.
Saud SayedSaud Sayed
10:54 23 Feb 22
Great services for filing for income tax, GST registration and company registration. Have been using their services for the last 5 years. No need to visit any of their offices as everything happens on the phone and online.
js_loader

Leading Brands Rely On Our Expertise

innovecaer
pepperfry
aviva
hotgen
doquity
it
Atlas
zopper
pharma clinik
porter
larson and turbo
exitel
Carwale
lotte
Deon
indian post
testbook
oskar