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CS Divesh Goyal

Practicing Company Secretary, Delhi


GOYAL DIVESH & ASSOCIATES

Mob: +91- 8130757966


csdiveshgoyal@gmail.com

PROCESS TO GET STATUS OF DORMANT UNDER


GOYAL DIVESH & ASSOCIATES,
PRACTICING COMPANY SECRETARY,

SERIES
NO- 21

Section-455 of Companies Act, 2013 talks about a New


Provision Calls DORMANT
DORMANT COMPANY.
COMPANY. This concept was
not there in Companies Act, 2013. Another Name of this
concept by Professionals is ASSET
ASSET SHIELDING CONCEPT
UNDER COMPANIES ACT 2013.
A Dormant Company offers excellent advantage to the
promoters who want to hold an asset or intellectual property
under the corporate shield for its usage at a later stage. For
instant:
instant if a promoter wants to buy lands now for its future project at a comparatively
lesser price, he may do the same through dormant company so that he can use the
land for its future project. Thus, dormant company status is a new phenomenon in the
Companies Act 2013 and is an excellent tool for keeping assets in the company for its
future usage. A dormant company may be either a public company or a private
company or a one person company.
There are around 1.5 lakh dormant companies present in Indian corporate sector
according to recent government data which are either incorporated for future project
or to hold only IPRs or assets. Some are yet to carry out the operations or are in
operational stage for a fair period of time. It is not always that by dormant companies
it is meant that they are defunct. They were just not in operation because of the
nature of business they perform.
Certain companies, due to the nature of their business, may not be able to start any
business, for a long time from the date of incorporation as for instance any business
for creation of intellectual property or for a future project and has no significant
accounting transaction. Such a company may be an Inactive company.

CS Divesh Goyal
Practicing Company Secretary, Delhi
GOYAL DIVESH & ASSOCIATES

Mob: +91- 8130757966


csdiveshgoyal@gmail.com

Construction Companies/ Real Estates companies Incorporate New companies to Hold


Land/ Properties for future projects. This concept is Beneficial for them, by this
Concept they can Incorporate Company and Purchase Property/Land in that
company and get status of Dormant Company, if a company get status of dormant
company there are less compliance in dormant company in comparison of active
company. It will help to save cost of compliances for inactive companies.
Bare Act Language: According to Section 455 of the Companies Act 2013, where a
company is formed and registered under this Act for a future projector to hold an
asset or intellectual property and has
has no significant accounting transaction
transaction, such a
company or An Inactive Company may make an application to the Registrar in such
manner as may be prescribed for obtaining the status of a dormant company.
Procedure for Obtaining Status of DORMANT COMPANY is given below: Before
discussion of Process of Obtaining Status of Dormant Company Lets Discuss some
important TERMS:
 INACTIVE COMPANY: Inactive Company means a company which,
 has not been Carrying on Any Business or operation, or
 has not made any Significant Accounting Transaction During The Last Two
Financial Years,
 has not filed Financial Statements and Annual Returns during the LAST
TWO FINANCIAL YEARS.

SIGNIFICANT

ACCOUNTING

TRANSACTION:

Significant

Accounting

Transaction means any transaction other than


than Payment of Fees by a company to the Registrar;
 Payments made by it to fulfill the requirements of this Act or any other law;
 Allotment of shares to fulfill the requirements of this Act; and
 Payments for maintenance of its office and records.
Above Mention Transactions are excluded from Significant Accounting Transactions. If
a company has made above mention transactions in last two year then also that company
will fall under definition of Inactive Company.

CS Divesh Goyal
Practicing Company Secretary, Delhi
GOYAL DIVESH & ASSOCIATES

Mob: +91- 8130757966


csdiveshgoyal@gmail.com

THE COMPANY MAY CARRY FOLLOWING BUSINESS TRANSACTION IN THE

PERIOD OF DORMANT:
 FINANCIAL STATEMENT: The term FINANCIAL STATEMENT as per section
2(40) mean;
 Balance-Sheet at the end of Financial year;
 Profit & Loss Account or Income or Expenditure account, as may be
applicable;
 Cash Flow for the Financial year; and
 Explanatory note attached to any document in sub-clause (i) or (ii) above;
* As per Sub- Section 4 Section- 455: Where a company Not Filed or Fails to File
Financial Statements or Annual Return for TWO (2) Financial Year consecutively,
The Registrar of Company (ROC) shall issue a notice to that company and enter the
name of such company in register maintain for Dormant Company.
Before applying for Status of Dormant Company following Conditions required to
be fulfilled:
 No inspection, inquiry or investigation has been ordered or taken up or
carried out against the company;
 The company is neither having any public deposits which are outstanding
nor is the company in default in payment thereof or interest thereon;
 No prosecution has been initiated or pending against the company under any
law;
 The company has not defaulted in the payment of workmens dues;
 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.;
 The application has not been made with an objective to deceive the creditors
or to defraud any other person;
 The securities of the company are not listed on any stock exchange within or
outside India;

CS Divesh Goyal
Practicing Company Secretary, Delhi
GOYAL DIVESH & ASSOCIATES

Mob: +91- 8130757966


csdiveshgoyal@gmail.com

 The company is not having any outstanding loan, whether Secured and
Unsecured- But if company has any Outstanding Unsecured Loan then the
company may apply for status of DORMANT only after obtaining NOC from
the lender. Such NOC required to be attached in the Form which require to
file with ROC.
 There is No Dispute in the Management or Ownership of The Company; A
certificate in this regard required to taken from Management. Such
Certificate required to be attached in the Form which require to file with
ROC.

PROCESS FOR OBTAINING STATUS OF DORMANT COMPANY:


COMPANY:
 Call a Board Meeting- to call EGM.
 Authorization to director to make application for Dormant with ROC.


Issue Notice of General Meeting

 Engage an Auditor/ Chartered Accountant to issue certificate.


 Hold Extra Ordinary General Meeting
 Pass Special Resolution.
 MUST File E-form MGT-14 with ROC.

Attachment:
a. CTC of Special Resolution.
b. Notice of EGM along with Explanatory Statement.
 After filling of form MGT-14, File Form MSC-1 with the registrar.

Attachments:
a. CTC of Board Resolution.
b. CTC of Special Resolution.
c. Auditors Certificate.
d. Statement of Affairs duly certified by Chartered Accountant or
Auditor(s) of the company.
e. Latest Financial Statement and Annual Return of the Company is
mandatory to attach In Case The Same Is Filed To Registrar.
f. Certificate regarding no dispute in the management or ownership

CS Divesh Goyal
Practicing Company Secretary, Delhi
GOYAL DIVESH & ASSOCIATES

Mob: +91- 8130757966


csdiveshgoyal@gmail.com

g. Consent of lender, if any loan is outstanding.

Processing Type
The eForm will be auto approved (STP).

Email
When an eForm is approved/ rejected by the authority concerned, an
acknowledgement of approval/rejection with related documents is sent to the user in
the form of an email to the email id of the company.

Certificate
A system generated Certificate of status of a Dormant Company is issued by Registrar
and sent to the user as an attachment to the email, after approval is granted. Once the
form is approved the status of the company shall be changed to Dormant under
section 455
(Application to ROC for obtaining the status of dormant company)
The Companies (Registration Offices and Fees) Rules, 2014
Application made

(i)

By a company having an authorized share capital of:


a) Up to Rupees 25,00,000
b) Above Rupees 25,00,000 but up to Rupees 50,00,000
c) Above Rupees 50,00,000 but up to Rupees 5,00,00,000
d) Above Rupees 5,00,00,000 but up to Rupees 10 crore
or more
e) Above Rupees 10 crore

(ii) By a company limited by guarantee but not having a


share capital

Other than
OPC & Small
company

OPC &
Small
company

2,000
5,000
10,000
15,000
20,000

1,000
2,500
N/A
N/A
N/A

2,000

N/A

NOTE:
I.

FORMS REAQUIRE TO FILE WITH ROC AFTER STATUS OF DORMANT:

CS Divesh Goyal
Practicing Company Secretary, Delhi
GOYAL DIVESH & ASSOCIATES

Mob: +91- 8130757966


csdiveshgoyal@gmail.com

After Getting certificate of Dormant Company Forms which company can file
with ROC are:
 A dormant company shall file a declaration annually in Form No. MSC-3
within thirty days from the end of each financial year.
 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.
 If company wants to get Active status to be file e-form MSCMSC-4 with ROC,
then gets active company status.
 If company carrying any Significant transaction during the dormant
period, the directors shall within 7 days from such event, file an
application with ROC in e-form MSC-4, for obtaining the status of an
active company.

II.

The company may carry following business transaction in the period of


Dormant:
(a) Payment of fees by a company to the Registrar;
(b) Payments made by it to fulfill the requirements of this Act or any other Law;
(c) Allotment of shares to fulfill the requirements of this Act; and
(d) Payments for maintenance of its office and records.

III.

One Person Company (OPC) can also be registered as a dormant company


under section 455.

IV. OTHER PROVISONS:


 A dormant company shall have such Minimum Number of Directors. {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}
 File such documents and pay such annual fee as may be prescribed to the
Registrar to retain its dormant status.
 A Dormant Company need not enclose cash flow statements in its annual
accounts.

CS Divesh Goyal
Practicing Company Secretary, Delhi
GOYAL DIVESH & ASSOCIATES

Mob: +91- 8130757966


csdiveshgoyal@gmail.com

 A Dormant Company is required to convene at least one meeting of the Board


of Directors has been conducted in each half of a calendar year and the
gap between the two meetings is not less than ninety days. Section 173(5)
V.

A Dormant Company formation can prove useful when an individual wishes to


stop trading for a specific period of time.
For Example:
Example: if an individual has been running a successful company but
wishes to move abroad, he can choose to preserve his company so that he can
restart it at a later date by just doing some negligible formalities like registering
his company as a Dormant Company with the registrar. Since a Dormant
Company remains in the books of registrar for a considerable time it provides
the company with a sense of maturity and might help to boost its credit
worthiness.

(Author CS Divesh Goyal, ACS is a Company Secretary in Practice from Delhi and can be
contacted at csdiveshgoyal@gmail.com) Disclaimer: The entire contents of this document have
been prepared on the basis of relevant provisions and as per the information existing at the time of
the preparation. Though utmost efforts has made to provide authentic information, it is suggested
that to have better understanding kindly cross-check the relevant sections, rules under the
Companies Act, 2013. The observations of the author are personal view and the authors do not take
responsibility of the same and this cannot be quoted before any authority without the written

CONTACT ON BELOW MENTIONS EMAIL ID FOR ANY QUERY OR QUESTION


OR SUGGESTIONS:
Regards,
CS Divesh Goyal
GOYAL DIVESH & ASSOCIATE
Mob: +91-8130757966
csdiveshgoyal@gmail.com