Companies act 2013

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15 April 2014 What are the advantages of being a Dormant Company?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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15 April 2014 Dormant Company is a very important concept under the New Companies Act of 2013. There are number of Companies in India that are either incorporated for future project or hold only assets or IPRs and are yet to carry out the operations or are in-operational for substantial period. In many case, the dormant status did not mean that these Companies were defunct. Due to the nature of business of these types of Companies, they were not in operation for the time being.

Earlier, there was no relaxation under the law to treat them at a different footing than the active Companies of the same class. They were required to file forms as usual, hold board meetings at prescribed intervals and so on so forth.

According to Section 455 of the Companies Act 2013, 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 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.

According to section 455 of Companies Act 2013, “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;

According to section 455 of Companies Act 2013,significant accounting transaction” means any transaction other than—

(a) payment of fees by a company to the Registrar;

(b) payments made by it to fulfil the requirements of this Act or any other law;

(c) allotment of shares to fulfil the requirements of this Act; and

(d) payments for maintenance of its office and records.

For details please refer section 455 of the Companies Act 2013.

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