Dormant Company Status - How to apply?

This document covers

1. Background
2. What is Dormant Company?
3. Conditions for obtaining Dormant Status of the company
4. Procedure for filing Dormant Company Status
5. Compliance needs to be done by Dormant Company
6. How to change the status of the company from Dormant Company to Active Company
7. Frequently Asked Questions

1. Background

There are instances in which the company is incorporated but is unable to conduct business as a result of a variety of factors, such as internal factors and market conditions. In these instances, the companies have the option to file for Dormant Status with the ROC.

The companies can choose to become dormant for a variety of reasons, such as the preservation of the company's name for the future, reduced compliance, or future business plans.

2. What is Dormant Company?

Dormant Company means “Inactive Company”. As per Companies Act 2013, Dormant Company means

• A Company which is formed and registered under Companies Act 2013 or earlier act
• For a future project (or)
• To hold an asset or intellectual property and has no significant accounting transactions during last 2 financial years or has not filed any financial statements and annual returns during last 2 financial years

3. Conditions for obtaining Dormant Status of the company

The companies who wants to apply dormant status needs to make sure the below

• No inspection, inquiry or investigation has been ordered or taken up or carried out against the company
• No prosecution has been initiated and pending against the company under any law
• The company is neither having any public deposits which are outstanding nor is the company in default in payment thereof or interest thereon
• The company is not having any outstanding loan, whether secured or unsecured. If there is any such loan, the company needs to disclose while file filing application
• There is no dispute in the management or ownership of the company
• 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
• The company has not defaulted in the payment of workmen’s dues
• The securities of the company are not listed on any stock exchange within or outside India

4. Procedure for filing Dormant Company Status

1. Application: The companies needs to apply for Dormant Company status in Form MSC-1
2. Time Limit: The company can be in dormant status for a period of 5 consecutive years. If the company does not apply for removal of dormant status after 5 years, the ROC will remove the name of the company from ROC Records
3. Step by Step procedure:
   • Board Meeting: needs to be conducted and notice of general meeting needs to be issued
   • General Meeting: will be conducted and special resolution for application of dormant company needs to be passed
   • File Form MGT 14 with special resolution and board resolution
   • File e Form MSC-1 for dormant status (It needs to be filed within 30 days from the date of special resolution)
     Note: Along with Board Resolution and special resolution, copy of statement of affairs certified by the auditor of the company not older than 30 days is mandatory
4. Government fee for filing MSC-01

   S.No	Authorised Share Capital	OPC and Small Companies	Other than OPC and small Companies
   1	Upto Rs 25,00,000	Rs 1000	Rs 2000
   2	25,00,001 to 50,00,000	Rs 2500	Rs 5000
   3	50,00,001 to 5 Crore	Rs 10,000	Rs 10,000
   4	Above 5 Crores to 10 Crores	Rs 15,000	Rs 15,000
   5	Above 10 Crores	Rs 20,000	Rs 20,000

5. Certificate: The ROC will give the Dormant Company certificate in MSC-2 form.

5. Compliance needs to be done by Dormant Company

• Form: The dormant companies needs to file simplified annual return in Form MSC-3
• Due Date: Form MSC-3 is a annual return and the due date is April 30 every year
• Requirements: Board Resolution and audited financial statement
• Fees

  S.No	Authorised Share Capital	Fees
  1	Less than Rs 1,00,000	Rs 200
  2	1,00,000 to 4,99,000	Rs 300
  3	5,00,000 to 24,99,999	Rs 400
  4	25,00,000 to 99,99,999	Rs 500
  5	1 Crore or above	Rs. 600

• Penalty for Delayed Filing of MSC-3

  S.No	Period of Delay	Penalty
  1	up to 30 days	2 times of normal fees
  2	more than 30 days and up to 60 days	4 times of normal fees
  3	more than 60 days and up to 90 days	6 times of normal fees
  4	more than 90 days and up to 180 days	10 times of normal fees
  5	more than 180 days and up to 270 days	12 times of normal fees

• Income Tax Return: The dormant companies are required to file Income Tax returns even if they are in Dormant Company Status
• Director KYC: The Directors of the company are required to do director KYC every year to keep the company active

6. How to change the status of the company from Dormant Company to Active Company

• Application Form: The dormant company needs to file Form MSC-4 to change the status of the company from dormant to active company
• Documents: Return filed in MSC-3 and board resolution for making the company as active is required
• Government Fee for filing MSC-4

  S.No	Authorised Share Capital	OPC and Small Companies	Other than OPC and small Companies
  1	Upto Rs 25,00,000	Rs 1000	Rs 2000
  2	25,00,001 to 50,00,000	Rs 2500	Rs 5000
  3	50,00,001 to 5 Crore	Rs 10,000	Rs 10,000
  4	Above 5 Crores to 10 Crores	Rs 15,000	Rs 15,000
  5	Above 10 Crores	Rs 20,000	Rs 20,000

• The company needs to file MSC-4 within 7 days from the date of commencement of activities
• Certificate: The ROC will issue the active company certificate in MSC-5

7. Frequently Asked Questions