Meaning of Dormant Company – Procedure to obtain Dormant Status – Compliances by Dormant Company – Seeking the status of Active Company from Dormant Company The concepts of dormant and active company, legal procedure involved in obtaining the status of dormant company, compliances for the purpose of dormant company and procedure to make a dormant company active.

1. Dormant Company
leSSoN outliNe
– Meaning of Dormant Company
– Procedure to obtain Dormant Status
– Compliances by Dormant Company
– Seeking the status of Active Company from
Dormant Company

2. EP-SBEC
iNtroductioN
he word “Dormant” means inactive or inoperativ i.e., not carrying out any business activity and has
applied to the Registrar of Companies (“ROC”) to change its status from “Active Company “to “Dormant
Company”.
A company may become dormant immediately after its registration or after a few years of its incorporation.
ompany the liberty to start its business after a few years thus providing cost and time advantage.
A company may choose to temporarily shut down due to adverse market conditions and decide to
commence its operations at a future date.
In all such cases, a company may make an application to the ROC to change its status from “active” to
“dormant”.
‘ ormant company’ status is an excellent tool for keeping assets in the company for its future usage.

3. Dormant Company
oBtaiNiNg dorMaNt StatuS
A Company can obtain its status as Dormant Company suo-moto or the ROC may
declare a company as Dormant.
SuoMotoapplication
Rules, 2014
Dormant by ROC
in the register maintained for dormant companies.
empowered suo moto to change the status of a company into a dormant company.
Application for Dormant
Company by the applicant Before the end of 5
consecutive years -
Change in status of
company either from
“Dormant” to “Active” or
“Dormant” to “Strike off”.
Suo Moto change in the
status of the company by the
R
Where a company fails to comply with the requirements of Section 455 of the Companies Act, 2013
Register of dormant companies.
The Register of dormant companies is maintained on www.mca.gov.in or any
members of the company to pass a special resolution for making application to the ROC to obtain
status of a dormant company.
meeting.

4. EP-SBEC
The company shall hold the General Meeting at the appointed time, place and date as per the notice
calling the said meeting. The notice shall propose the resolution as a special resolution.
The company shall pass a special resolution and authorize the director(s) to make application to
ROC after issuing a notice to all the shareholders of the company for this purpose and obtaining
consent of at least 3/4th shareholders (in value).
After passing
30 days from passing of the said special resolution
documents.
(a) any inspection, inquiry or investigation has been ordered or taken up or carried out against the company.
(b) any prosecution has been initiated and pending against the company under any law.
(c) there are public deposits which are outstanding or the company is in default in payment thereof or
interest thereon.
(d) there is any outstanding loan, whether secured or unsecured. In case the company has any outstanding
unsecured loan, the company must apply for the status of a dormant company after obtaining the
concurrence or approval of the lender which is required to be enclosed with Form MSC-1
(e) 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 is required to be attached in the Form which is
(g) there are outstanding statutory taxes, dues, duties, etc., payable to the Central Government or any
State Government or local authorities etc .
(h) there is default in payment of its workmen’s dues.
(i) the Company is a listed company within or outside India.
(a) Dormant Company shall hold only two board meetings in a year with a gap of 90 days in between the
two board meetings.
The provision of rotation of auditors is not applicable in case of a dormant company.

5. Dormant Company
dormant company need not hold Annual General Meeting every year
dvantage to promoters who hold intellectual property or an asset under the corporate shield for
its usage at a later stage.
Companies can enjoy the status of dormant company for a period of 5 consecutive years
Dormant Company is not liable to pay any taxes until it reacquires its active status
reacquire its active status and it reduce cost of incorporation of a new
company
revieW QueStioNS
What is the maximum allowable period as per Companies Act 2013 to be in dormant status?
5 calendar years
5 years
5 consecutive years
which form.
Form MSC -1
Form MSC -2
Form MSC -3
Form MSC -4
1. A company can be in dormant status for unlimited period of time.
2. Regional Director can suo moto change the status of the company from Active to dormant company
3. A Listed Company cannot make an application for Dormant status

6. EP-SBEC
coMPliaNce reQuireMeNtS By dorMaNt coMPaNy
The compliance requirements to retain the status of a
–A dormant company shall have a minimum number of directors in case of a public company,
directors in case of a private company and director in case of a One Person Company.
– A Dormant Company is required to convene at least meeting of the Board of Directors in each half of
a calendar year and the gap between the two meetings is not less than days. [Section 173(5)
– The provisions of the Act in relation to the rotation of auditors are not applicable to dormant companies.
person or there is any change in the directors of the company.
(a) An application Form MSC-4
Where a dormant company does or omits to do any act mentioned in the grounds in the application
such event for obtaining the status of an active company.
Where the ROC found that the company has actually been active, the ROC can remove the name of
such company from Register of dormant companies and treat it as an active company.
called Companies
Fresh Start Scheme, 2020 or CFSS-202 applicable from 1st April, 2020 to 30th
i) apply to get themselves declared as Dormant Company under Section 455 of the Companies Act, 2013
said form.
This ensures that the inactive companies remain on the Register of ROC with least compliance requirements.
obtaining status of “Dormant Company” under section 455 of Companies Act, 2013 before the said scheme.

7. Dormant Company
revieW QueStioNS
A. State whether the following statement is “True” or “False”
In which form an application is to be made for obtaining the status of an active company
(a) Form MSC - 3
(b) Form MSC - 4
(c) Form MSC - 5
(d) Form MSC - 6

8. – ‘Dormant company’ means a company which is an inactive company in the records of the Registrar
of Companies and which is not carrying out any business activity and has applied to the Registrar of
Companies to change its status in the Register of Companies.
– ‘Inactive company’ means a company which has not been carrying on any business or operation, or
– Section 455 of the Companies Act, 2013 read with Companies (Miscellaneous) Rules, 2014 stipulate
the provisions pertaining to “Dormant Company”.
– A company can either on an application to Registrar change the status of the company from active to
dormant company or the Registrar can suo moto after issuing the notice to the concerned company
change the status of the company from active to dormant company in the Register of Companies and
enter the name of such a dormant company in the Register of Dormant Companies maintained by the
Registrar.
for changing the status of the company from dormant to active company or such a company’s name
of being a dormant company, then such a company’s status is automatically changed from dormant to
active company in the Register maintained by the Registrar.
requirements.
gloSSary
a. carried on any business or operations
years
years
teSt yourSelF
(These are meant for re-capitulation only. Answers to these questions are not to be submitted for evaluation)
1. State the process and the power of Registrar of Companies to change the status of active company
into dormant company