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RegisterasDormantCompany

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RegisterasDormant
Company
A Limited Company (http://www.indiafilings.com/publiclimited
company.php) or Private Limited Company
(http://www.indiafilings.com/companyregistration.php)orOnePerson
Company (http://www.indiafilings.com/onepersoncompany.php) can
register itself as a dormant company and avail certain exemptions
from mandatory compliances. Dormant company status is mainly
obtained for companies registered to hold an asset or intellectual
property and have no significant accounting transactions. In this
article, we look at the procedure for registering as a dormant
companyinIndiaanditsadvantages.

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Whatisadormantcompany?
AspertheCompaniesAct,2013,thedefinitionforadormant
companyis:

Where a company is formed and registered under this Act for a

futureprojectortoholdanassetorintellectualpropertyandhasno
significant accounting 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.Explanation.Forthepurposesofthissection,

1. 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, or has not filed financial statements and annual
returnsduringthelasttwofinancialyears
2. significantaccountingtransactionmeansanytransactionother
than
1. paymentoffeesbyacompanytotheRegistrar
2. paymentsmadebyittofulfiltherequirementsofthisActor
anyotherlaw
3. allotmentofsharestofulfiltherequirementsofthisActand
4. paymentsformaintenanceofitsofficeandrecords

Therefore,anycompanythatwishestobeonlyanassetcompanyor
have no significant business activities can apply and become a
dormantcompany.

Eligibility for registering as

dormantcompany
Acompanycanapplyforandbecomeadormantcompany,only
ifthefollowingcriteriasaresatisfied:

1. Noinspection,inquiryorinvestigationhasbeenorderedortaken
uporcarriedoutagainstthecompany
2. No prosecution has been initiated and pending against the
companyunderanylaw
3. The company is neither having any public deposits which are
outstandingnorthecompanyisindefaultinpaymentthereofor

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interestthereon
4. The company is not having any outstanding loan, whether
secured or unsecured: Provided that if there is any outstanding
unsecured loan, the company may apply under this rule after
obtainingconcurrenceofthelenderandenclosingthesamewith
FormMSC1
5. There is no dispute in the management or ownership of the
company and a certificate in this regard is enclosed with Form
MSC1
6. The company does not have any outstanding statutory taxes,
dues, duties etc. payable to the Central Government or any
StateGovernmentorlocalauthoritiesetc.
7. The company has not defaulted in the payment of workmens
dues
8. The securities of the company are not listed on any stock
exchangewithinoroutsideIndia.

Procedureforregisteringasa
dormantcompany
Toobtainthestatusofdormantcompany,thefollowingstepsmustbe
followedbythecompany:

BoardResolution
ThecompanymustfirstconductaGeneralMeetingoftheBoardand
passaspecialresolutionsforapplyingtobecomeadormant
companyorsendnoticeofthesametoallshareholdersandobtain
consentofatleast3/4oftheshareholdersinvalue.

FilingFormMSC1
Once,theBoardResolutionorshareholdersapprovalisobtained,the
samecanfiledwithMSC1(Applicationforstatusofdormant
company)withtherequisitefees.

Certificateofdormantcompany
IftheRegistrarissatisfiedwiththeapplication,thenaCertificatewill
be issued by the Registrar in MSC2 allowing the status of dormant
company. Details of all dormant companies are maintained by the
RegistrarandalsopublishedontheMCAwebsite.

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Maintainingdormantcompany
status
Dormant companies are required to file a Return of Dormant
CompanyeachyearbeforeApril30thwiththeMinistryofCorporate
Affairs. The return of dormant company must include detail
of financial position of the company duly audited by a Chartered
Accountant in practice. The return of dormant company is filed
usingFormMSC3.

Returningtoactivecompany
status
Torestoretheactivecompanystatus,anapplicationcanbemadeto
the Registrar in form MSC4. If the Registrar is satisfied with the
application,thecompanywillberestoredtoactivestatusbyissuance
ofMSC5.

Advantages of dormant
companystatus
Once a company is registered as a dormant company, the annual
return for the company can be filed using a simplified form MSC3.
Also, the number of Board Meetings to be conducted by the
Companyisreducedandthecomplianceburdenisreduced.

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Company(https://www.indiafilings.com/learn/tag/limited
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limitedcompany/)

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