CS CHARU VINAYAK
Quick Summary
Section 455 of the Companies Act 2013 read with Companies (Miscellaneous) Rules, 2014 stipulate the provisions pertaining to Dormant Company. Where a company is formed and registered under this Act for a future projector to hold an asset or intellectual property and has no significant accounting tra
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FAQ :
A dormant company is a company registered under the Companies Act for a future project, to hold an asset or intellectual property, and has no significant accounting transactions.
A significant accounting transaction excludes payments for registrar fees, fulfilling legal requirements, share allotments, and office maintenance. All other transactions are considered significant.
A company can apply for dormant status voluntarily by filing Form MSC-1 with the Registrar of Companies, or the Registrar can declare a company dormant if it hasn't filed financial statements or annual returns for two consecutive years.
Dormant companies have fewer statutory compliances, lower costs, are not required to include a cash flow statement, and the rotation of auditors rule doesn't apply. It's beneficial for holding assets or intellectual property for future use.
A company can enjoy dormant status for a period of 5 consecutive years. After this period, the Registrar may initiate the process of striking off the company's name if it remains dormant.
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