India Grow, You Grow
🌟 Best Practices for Dormant Company Registration
As defined under the Companies Act, 2013, a Dormant Company is one that is registered but not engaged in any significant business activity or operations. It may have been incorporated for future ventures or to hold assets without active trading.
Dormant status filing allows companies to minimise compliance requirements while maintaining their registered status without the full burden of operational reporting obligations.
If your company is in a similar position and you are considering transitioning to dormant status to reduce compliance burdens, IndiaFills is here to assist. Our team specialises in navigating the dormant status filing process and offers expert guidance for a seamless transition.
Ready to simplify your company’s compliance? Contact IndiaFills today to get started.
📌 What is a Dormant Company?
A Dormant Company (also called Dormant Entity or Dormant Corporation) is a registered business entity that is not currently engaged in significant business activities or operations.
Typical reasons for dormant status include:
- Incorporation for a future project or venture
- Holding assets or intellectual property rights
- No significant transactions during a financial year
- Remaining inactive temporarily
Note: Dormant companies can revert to active status and cannot retain dormant status for more than five consecutive financial years.
📖 Overview of Dormant Status Under the Companies Act, 2013
Under the Companies Act, a company established for future projects, asset holding, or intellectual property management without significant financial activity may be declared dormant by applying to the Registrar of Companies (ROC).
Meaning of Inactive Company
An Inactive Company is one that has not engaged in any business activity or significant accounting transactions in the past two financial years, or has not filed financial statements/annual returns with the ROC for the preceding two years.
Significant Accounting Transactions
Significant transactions exclude:
- Payments to ROC or statutory bodies
- Share allotment transactions
- Payments for maintenance of office or records
🎯 Reasons for Obtaining Dormant Company Status
- Name Reservation: Protect your company name while preparing for future business.
- Business Restructuring: Useful during operational restructuring phases.
- Extended Absences: Ideal if owners are away due to illness, travel, maternity leave, etc.
✅ Benefits of Opting for Dormant Company Status
- Preservation of Company Name during inactivity
- Reduced Compliance Requirements and costs
- Flexibility to Reactivate business activities easily
- Limited Applicability of Companies Act Provisions
- Simplified Annual Return Filing
- No Auditor Rotation Requirement
- Bi-Annual Board Meetings instead of more frequent meetings
🛑 Mandatory Requirements for Obtaining Dormant Status
Minimum Number of Directors
- Public Company: 3 Directors
- Private Company: 2 Directors
- One Person Company: 1 Director
Special Resolution or Shareholder Consent
A special resolution or consent from at least three-fourths of shareholders (by value) is required to apply for dormant status.
Conditions to be Satisfied
- No ongoing inspections, inquiries, or prosecutions
- No outstanding public deposits or loan defaults
- No ownership/management disputes (certificate required)
- All statutory dues cleared
- Securities not listed on any stock exchange
- Lender consent if unsecured loans are outstanding
📝 Procedure for Dormant Status Filing
- Board Meeting
Pass a board resolution to apply for dormant status and authorise a director to manage the process. - EGM Notice
Issue notice for an Extraordinary General Meeting (EGM) explaining the proposal. - CA Certification
Prepare and certify the Statement of Affairs with a Chartered Accountant or statutory auditor. - Conduct the EGM
Hold the EGM and pass a special resolution for dormant status. - File MGT-14
File the special resolution with ROC using Form MGT-14 within 30 days of the EGM. - Submit Application (Form MSC-1)
Apply to ROC with Form MSC-1, attaching:
- Board resolution certified copy
- Special resolution certified copy
- Auditor’s certificate
- Statement of affairs certified by CA
- NOC from lenders (if applicable)
- Other regulatory approvals (if any)
- Issuance of Certificate
Upon approval, ROC issues a Certificate of Dormant Status (Form MSC-2).
📅 Annual Compliance for Dormant Companies
Dormant status does not exempt the company from all compliance. Key annual obligations include:
Accounting & Financial Statements
Maintain accounts for administrative expenses and hold at least two board meetings yearly.
Statutory Audit
Undergo statutory audit of financials (no auditor rotation required).
Tax Returns
File applicable TDS, GST, and Income Tax returns as required.
ROC Filings
Submit Form MSC-3 with audited financials and annual fee within 30 days after the financial year-end.
📋 ROC Forms for Dormant Company Registration
S.No | Form Name | Purpose |
1 | MGT-14 | File special resolution with ROC within 30 days |
2 | MSC-1 | Apply for dormant status post special resolution |
🚀 Simplify Dormant Status Filing with IndiaFills
At IndiaFills, we provide end-to-end assistance for your dormant company registration and annual compliance needs. Our expert team ensures:
- Accurate and timely application processing
- Support with all ROC filings and documentation
- Guidance on tax, audit, and return filing requirements
Simplify your Dormant Status filing today with IndiaFills – Get Started now!
