Register as Dormant Company

Dormant means inactive or sleeping. Register as Dormant Company , As per Companies Act, 2013 a company is deemed inactive or dormant if:

• it does not carry on with its business operations on a regular basis.
• it does not have any significant transactions in the last two consecutive financial years.
• it has not filed annual returns in the last two consecutive financial years.

A dormant company is incorporated for future use. It does not have any significant accounting transactions but holds assets.

Eligibility

Getting a dormant status for your company is not easy. Your company needs to be eligible for it which is as follows:

• There should be no past or ongoing inspection or investigation against the company.
• No pending prosecution or court order against the company.
• No outstanding statutory dues, loans, taxes, etc. In case of an outstanding unsecured loan you can obtain consent from the lender and mention the same in form MSC-1.
• No dispute within management and those charged with governance regarding ownership.
• The company should not have any public deposits or outstanding interest to be paid.
• It should not have defaulted in payment of dues like workmen compensation etc.
• It should not be listed on any Indian or international stock exchange.

 

Only if these above mentioned criteria are fulfilled, a company is permitted to apply for dormant status.

Procedure for conversion

The procedure to obtain dormant status as follows:

• The Board of directors must conduct a Board Meeting and pass a special resolution in favor of dormant status. It should then send a notice to all the members of the company and obtain consent from at least 3/4 shareholders.
• After obtaining approval from the shareholders file Form MSC-1 with the Registrar. If the Registrar is satisfied with the application he shall issue a certificate of dormant status in Form MSC-2.

Every dormant company is mandatorily required to file Return of Dormant Company with the Ministry of Corporate Affairs (MCA). The return must be filed in Form MSC-3 before 30th April every year.

Hope you have liked our article on " Register as Dormant Company ". Let us know what you think in the comment section below. For more information you can visit www.registrationsindia.com