Dormant Company

A dormant company is a registered company that Indian company law treats as inactive, letting it stay on the register with lighter compliance while it waits to be put to use. Under Section 455 of the Companies Act, 2013, a company formed to hold an asset or intellectual property, to pursue a future project, or that simply records no significant accounting transaction may apply to the Registrar of Companies (ROC) for dormant status.

Legal basis

The status flows from Section 455 of the Companies Act, 2013, read with the Companies (Miscellaneous) Rules, 2014. The company applies in Form MSC-1, backed by a special resolution or the consent of at least three-fourths of shareholders in value, and the ROC records the status by issuing a certificate in Form MSC-2.

What "no significant accounting transaction" means

The company must record no significant accounting transaction, meaning any entry other than payment of ROC fees, payments to meet statutory requirements, allotment of shares, and payments to maintain its office and records. An "inactive company" is one carrying on no business, or with no significant transaction or statutory filings, for the last two financial years.

Ongoing compliance and limits

• File an annual Return of Dormant Company in Form MSC-3 within 30 days of the financial year-end, with an audited statement of financial position.
• Keep the minimum directors, three for a public company, two for a private company or one for an OPC, and hold at least one board meeting in each half of the calendar year.
• Dormant status can run for up to five consecutive years; beyond that the ROC may strike the company off.

Reactivation

To resume operations, the company files Form MSC-4 to regain active status, on which the ROC issues a certificate of active status in Form MSC-5.