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.
CAclubindia
