Rish s
Quick Summary
Purpose
- Start a company for a future project or hold an asset/intellectual property with no significant accounting transactions
- Inactive company with no significant accounting transactions
(Significant accounting transactions means transactions other than the basic procedural transactions i.e the payment of fees by a company to the Registrar and also payments to fulfil the requirements of this Act or any other law, allotment of shares to fulfil the requirements of this Act and payments for maintenance of its office and records.)
Requirements
- no inspection, inquiry or investigation ordered/taken up/carried out against the company nor any prosecution initiated/pending
- no outstanding deposits
- No secured loans
- If unsecured loans, then NOC from unsecured lenders
- No outstanding statutory taxes
Benefits
- Only 2 Board meetings in a year
- Rotation of Auditor not required
How to apply to become a Dormant Company and Compliances?
- File Form MSC 1 - giving reason for converting to Dormat
- Annual Return MSC 3, CA audited, within 30 days from end of financial year.
Again Convert to active Company
- File MSC 4
- If any event happens (which makes the company active), then within 7 days of event, MSC 4 needs to be filed.
- ROC can convert Dormant to Active, if they see transactions.
Consequences
If a company is Dormant Company for 5 years, then ROC can strike off the name.
FAQ :
A dormant company is one that is formed to hold an asset or intellectual property for a future project and has no significant accounting transactions.
Significant accounting transactions exclude basic procedural ones like paying fees to the Registrar, fulfilling legal requirements, allotting shares, and maintaining office records.
Key requirements include no inspections or investigations, no pending prosecutions, no outstanding deposits, and either no secured loans or a No Objection Certificate (NOC) from unsecured lenders.
You need to file Form MSC 1, providing the reason for converting to dormant status.
Dormant companies must file an Annual Return in Form MSC 3, which needs to be audited by a Chartered Accountant within 30 days of the financial year's end.
If a company remains dormant for five years, the Registrar of Companies (ROC) has the power to strike off its name.
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