Dormant Status Filing (Bank Statement · Form MSC-1 · Form MSC-3)

As defined under the Companies Act of 2013, a dormant company is registered but not engaged in any significant business activity or operations. It may have been established for future ventures or to hold assets without active trading. Dormant status filing allows these companies to minimise compliance requirements and maintain their registered status without the full spectrum of operational reporting obligations. If your company is in a similar state and you're considering transitioning to a dormant status to reduce compliance burdens, we are here to assist. Our team specialises in navigating the dormant status filing process, offering expert guidance to ensure a seamless transition. Ready to simplify your company's compliance landscape? Contact us today to get started.

What is a Dormant Company?

A Dormant Company, also known as a Dormant Entity or Dormant Corporation, refers to a registered business entity not currently engaged in significant business activities or operations. Dormant status typically arises when a company has temporarily ceased its operational activities due to strategic reasons such as awaiting a future project, not yet commencing substantial business operations, or primarily existing to hold or manage intellectual property rights without directly engaging in revenue-generating activities. Such companies can apply to the Registrar to obtain the status of a Dormant company, with objectives including: being incorporated for a future project, serving as an asset or intellectual property, having no significant transactions in a specific financial year, or remaining inactive.

Overview of Dormant Status Under the Companies Act of 2013

When a company is established under the Companies Act of 2013 for purposes such as launching a future project, holding assets, or managing intellectual property and hasn't carried out any significant financial activities, it can be considered inactive. Such a company can apply to the Registrar for a change in status to become a dormant company, as outlined in the Companies Act.

Meaning of Inactive Company

An "Inactive Company" refers to a company that has not engaged in any business activity or conducted significant accounting transactions during the last two financial years. It also includes companies that have not filed their financial statements or annual returns with the Registrar of Companies (ROC) during the preceding two financial years.

Significant Accounting Transactions

Significant accounting transactions include all company financial activities, with the following exceptions: payments to the ROC or for fulfilling requirements under the Companies Act or any other applicable laws; transactions related to the allotment of shares; payments for the maintenance of the company's office or records.

Reasons for Obtaining the Status of a Dormant Company

Name Reservation: Business owners may register their company as dormant while preparing to launch their business, serving as a means to reserve the company name. Business Restructuring: When owners plan to restructure their operations, obtaining dormant status may be beneficial. Extended Absences: If owners anticipate extended periods away from operations due to illness, travel, maternity leave, sabbatical, etc., they may choose dormant status.

Benefits of Opting for Dormant Company Status

Preservation of Company Name: Ensures the company name is protected during inactivity. Reduced Compliance Requirements: Lowers regulatory burden under the Companies Act 2013. Opportunity for Reactivation: Flexibility to resume activities without forming a new entity. Limited Applicability of Company Act Provisions: Simplifies legal compliance. Easier Annual Return Filing: Streamlines filing via Form MSC-3. No Auditor Rotation: Exempt from auditor rotation obligations. Bi-Annual Board Meetings: Only one board meeting every six months.

Mandatory Requirements for Obtaining Dormant Status

To qualify under Section 455(5) and Rule 6: Minimum number of directors (public: 3, private: 2, OPC: 1). A special resolution or shareholder consent of at least three-fourths (by value) is required. No ongoing inspections, inquiries, prosecutions, outstanding public deposits, defaults, or undisclosed disputes. All statutory taxes, dues, duties, etc., must be cleared. The company's securities must not be listed on any stock exchange.

Procedure for Dormant Status Filing

1. Board Meeting: Pass a resolution to apply for dormant status and authorise a director to manage the process.
2. EGM Notice: Send detailed notice for EGM with an explanatory statement.
3. CA Certification: Get the company's Statement of Affairs certified by a statutory auditor or CA.
4. Conduct EGM: Pass special resolution in compliance with relevant sections and secretarial standards.
5. File MGT-14: File the special resolution with ROC within 30 days.
6. Submit MSC-1: Apply for dormant status with required documents and fees.
7. Issuance of MSC-2: Registrar issues certificate granting dormant status; file MSC-3 annually.

ROC Forms for Dormant Company Registration

Annual Compliance for Dormant Company

Annual compliance remains necessary: accounting & financial statements, statutory audits, tax return filings (TDS/GST/Income Tax where applicable), and ROC returns using Form MSC-3 within 30 days of the financial year end. Maintain registered address, conduct bi-annual board meetings, and prepare audited financial position statements certified by a practising CA.

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