Dormant Company Status 100% Online Filing Process
Apply for the dormant company status of your company and save on compliance costs. A company having no business at present, or created for future business, or to hold property or IPR, should consider obtaining the dormant status.
Pradeep Vallat
Founder "Autonomo""Setindiabiz’s knowledgeable, disciplined, and organized team made our company registration, tax, and IPR filings smooth, hassle-free, and worry-free."
Setindiabiz is Trusted By Leading Brands
| Overview of obtaining “Dormant Company” Status from the ROC | |
|---|---|
| Professional Fee |
|
| Government Fee |
|
| Time Required |
|
| Eligibility |
|
| Brief Process | The application to obtain the dormant status is filed after obtaining the consent of more than 75% of shareholders. The special resolution passed in EGM or Consent of shareholders is thus filed with the ROC in MGT-14 along with the application in MSC-1. |
- 100% Online Process
- Truly Digital
- Cost Effective
- All India Service
How to change company status as “Dormant Company”
If a company is inactive or the operations are on hold at present and it is likely to be operational in future or if the company is created to hold immovable property or IPR such as Trademark, Copyright, Patent etc., and does not have any significant accounting transaction, then this kind of company may apply for dormant company status. By changing the status to a “Dormant Company,” the company continues as a going concern and remains a valid legal entity for future projects or use. One of the objectives of converting an active company into a dormant company is to reduce the company’s compliance requirements under the Companies Act 2013. Here is the list of advantages when a company converts a dormant company.
- Continue as a legal entity
- Fewer Compliance Requirements
- Protect the Company Name
- Simplified Annual Return Filing
- Reduces Compliance Burden
- Rotation of the auditor does not apply
- Option to Revive later
- Only two Board Meetings in a year
When a company acquires the status of “Dormant Company”, it does not affect the debts, liabilities, obligations, or contracts incurred or executed before the date of change of status from an active company to a dormant company.
Mandatory Requirements for Obtaining Dormant Status
The legal provisions relating to a dormant company are prescribed under section 455(5) of the Companies Act and Rule 6 of the Companies (Miscellaneous) Rules, 2014. Following is the minimum statutory requirement that the applicant must fulfil before making an application to seek the dormant company status.
| Minimum Number of Directors | Special Resolution or Shareholder Consent |
|---|---|
| Convene an Extraordinary General Meeting (EGM) to pass a special resolution to change the status of the company to a Dormant Company and file an MGT-14 form to the ROC. |
Additional Conditions
- ✧There is no pending inspection, inquiry or investigation under any law
- ✧The company does not have any public deposits
- ✧The company has not defaulted on payment of interest on deposits.
- ✧There is no outstanding loan payable
- ✧There is no management or ownership dispute
- ✧There is no outstanding tax or government dues.
- ✧There is no default in salary or wage payment
- ✧The company is not listed on the Stock Exchange in India or abroad.
* Note:
A company having an outstanding secured or unsecured loan can also obtain the status of a Dormant Company after obtaining written consent from all such lenders or creditors. Such NOC shall be attached to the application.
Stepwise Process To Convert an Active Company a Dormant Company
Step 1: Convene Board Meeting
The Board of Directors shall pass a resolution approving the filing of an application for conversion of the company’s status as Dormant Company in the Board Meeting. The Board shall also authorise one director to act on this behalf and send Notices to all shareholders for the Extra Ordinary General Meeting.
Step 2: EGM Notice
Issue appropriate Notice calling the EGM along with an explanatory statement, clearly stating the reasons as to why the Board of directors proposes a change in the status of the company and as a “Dormant Company.”
Step 3: CA Certification of Statement of Affairs
While the EGM is scheduled, the authorised director needs to work with the Statutory Auditor or a Chartered Accountant in practice for certification of the Company’s Statement of affairs (Financials).
Step 4: Conduct of EGM
On the designated EGM Date, the meeting of shareholders to be conducted per secretarial standards and with the requisite quorum, a Special Resolution approving the filing of an application for conversion of the status from Active to Dormant Company need to be passed.
Step 5: Filing of MGT-14
Every special resolution passed in EGM needs to be filed with the Registrar of Companies in the prescribed form MGT-14 with the certified true copy of the resolution along with EGM Notice within 30 days of EGM.
Step 6: Application for Change in Status
After the MGT-14 is filed with the ROC, an application in the Form MSC-1 along with the scan copy of all resolutions, declarations, consent of creditors and CA Certificate is filed with the ROC for its approval.
Step 7: Change of Status From Active to Dormant Company
The registrar of companies examines the application made in MSC-1 and, if finds it in order, then issues a Certificate in form MSC-2. With the issue of the MSC-2 form the status of the company is changed as Dormant Company
List of Documents Required To Convert a Dormant Company
 Board Resolution authorising the conversion of a Dormant CompanyCopy of special resolution passed in the EGMCopy of memorandum of association/articles of associationLatest financial statement and annual return | Statement of affairs certified by CA/AuditorConsent from lender if loan/debt existsDeclaration/Certificates from Directors |
Applicable ROC Forms & ROC Fee
To acquire status as a Dormant Company, the following three applications shall be filed with the Registrar of Companies with the Prescribed Filing Fee
| No. | Form Name | Explanation | ROC Fee |
|---|---|---|---|
| 1. | e-Form – MGT-14 | The MGT-14 is filed to the ROC within 30 days of passing a Special Resolution to register the Special Resolution as required under section 117 of the companies act. | Rs. 300/- to Rs 600/- |
| 3. | e-Form – MSC-1 | The application for changing the status as Dormant Company is filed to the ROC in e-Form MSC-1 within 30 days of passing of the special resolution for change of status of the company as a dormant company | It depends on the capital of the company as per the table below. |
Filing Fee for MSC-1 (Application to make a company a Dormant Company)
| No. | Authorised Capital | Other than OPC or Small Company | OPC or Small Company |
|---|---|---|---|
| 1. | Up to Rs. 25,00,000/- | Rs. 2,000/- | Rs. 1,000/- |
| 3. | Rs. 25,00,001 To 50,00,000/- | Rs. 5000/- | Rs. 2,500/- |
| 3. | Rs. 50,00,001 To Rs 5 Crores | Rs. 10,000/- | N/A |
| 4. | Rs 5 Crores to Rs 10 Crores | Rs. 15,000/- | N/A |
| 5. | Above Rs. 10 Crores | Rs. 20,000/- | N/A |
Regular Compliance
The companies convert into a Dormant state to hold property, Intellectual Property Rights, or to be utilised for a future business. For example, a real estate developer may buy land for future projects. As a dormant company, ensure that the company meets minimum compliance after it has acquired the Dormant Company Status.
| Minimum Number of Directors |
|---|
While a company is on Dormant Status, it should meet the requirements of a minimum number of directors at all times under the Companies Act 2013. The minimum number of required directors, as per the company type, is as follows
|
| 2. Board Meeting |
|---|
| Even when the company is dormant, the Board of Directors must meet at least once every six months. |
| 3. Return of Allotment |
|---|
| If the dormant company allots new shares while the company is under Dormant Status, it shall continue to file a Return of Allotment in PAS-3 Form. |
| 4. Registered Address |
|---|
| Even if it has acquired dormant status, the company shall continue to maintain its registered office so that communication from the government departments and other stakeholders is received and responded to. |
Annual Return of Dormant Company
There is a myth surrounding the status of the Dormant Company. There are people who believe that by converting to a Dormant Company, they don’t have to do anything concerning compliance. Though there is relaxation with respect to several provisions of the Companies Act, it does not mean that the company does not have to do annual compliance for a dormant company. There are four constituents of annual compliance, such as accounting, statutory audit, ITR filing, and ROC Returns. We shall be discussing each aspect separately below.
- Accounting & Preparation of Financial Statements:The dormant company must maintain the records and conduct half-yearly board meetings. The company’s registered address is also to be maintained. Thus, there would be debit entries in the books of account for administrative expenses. Hence, even if the company has acquired dormant company status, it still needs to do accounting and prepare the financial statements of the company.
- Statutory Audit: Though there is a relaxation to auditor rotation, the statutory audit of the financial statement of the dormant company is still required. Hence, the company must prepare its books properly with supporting documents on its expenses and get the statutory audit done for the company.
- TAX Returns: The filing of TDS and GST Returns applies to dormant companies as well. The Income Tax Return has to be filed for the dormant company, just like it is filed for an active company.
- ROC Filing: With respect to the annual ROC Filing, there is significant relaxation as the dormant company has to file a simplified Annual ROC Return in form MSC-3, indicating the financial position of the company, duly certified by a Chartered Accountant in practice, within 30 days from the end of each financial year with the ROC
| Permitted Accounting Transactions for Dormant Company |
|---|
An inactive company or a company that does not have any significant accounting transactions acquires a dormant company status. Though no revenue-generating activities are permitted, a dormant company still needs to comply with the applicable laws of India and can only do the following transactions
|
