Monday, July 18, 2016

Dormant Companies – Annual Compliances

Dormant Companies – Annual Compliances 

What is a Dormant Company?

Section 455  of Companies Act 2013 states

(1) Where a company is formed and registered under this Act for a future project or to hold an asset or intellectual property and has no 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.

So dormant company can be a company formed for a future project or to hold an asset or intellectual property without there being any significant accounting transaction OR an inactive company. Now inactive company has been defined in section 455 as under:

(i) “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 returns during the last two financial years;

How to Register a Company as a Dormant Company?

As per the Companies (Miscellaneous) Rules, 2014, Application for obtaining status of dormant company can be made as per the following procedure.
For the purposes of sub-section (1) of section 455, a company may make an
application in Form MSC-1along with such fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 to the Registrar for obtaining the status of a Dormant Company in accordance with the provisions of section 455 after passing a special resolution to this effect in the general meeting of the company or 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).

Provided that a company shall be eligible to apply under this rule only, -

(i) If there is no inspection, inquiry or investigation has been ordered or taken up or carried out against the company;

(ii) If there is no prosecution has been initiated and pending against the company under any law;

(iii) If the company is neither having any public deposits which are outstanding nor the company is in default in payment thereof or interest thereon;

(iv) if 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 obtaining concurrence of the lender and enclosing the same with Form MSC-1;

(v) If there is no dispute in the management or ownership of the company
and a certificate in this regard is enclosed with Form MSC-1;

(vi) If 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.

(vii) If the company has not defaulted in the payment of workmen’s dues;

(viii) If the securities of the company are not listed on any stock exchange within or outside India.

Certificate of status of dormant company.-

The Registrar shall, after considering the application filed in Form MSC-1, issue a certificate in Form MSC-2 allowing the status of a Dormant Company to the applicant.

Minimum number of directors for dormant company.-

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: Provided that the provisions of the Act in relation to the rotation of auditors shall not apply on dormant companies.

What is the Annual Compliances of Dormant Company?

Return of dormant companies.-

A dormant company shall file a “Form MSC-1” annually, inter-alia, indicating financial position duly audited by a chartered accountant in practice in Form MSC-3 along with such annual fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 within a period of thirty days from the end of each financial year:

Provided that the 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.

1 comment:

  1. Sir, is it mandatory for a dormant company to conduct board meetings, prepare minutes and conduct agm.