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In the Companies Act, 2013 the concept of the Dormant Company was introduced under section 455. Dormant means inactive or inoperative company. The main ideology behind this concept that it helps the Companies which are not doing any business activity for the last two consecutive Financial year and don’t want their company to be struck off from the Registrar of Companies or on the other side to start a company for a future project or hold an asset/intellectual property, without any significant financial transaction then such company will also be termed as Dormant Company.
Below are the points if the Company intended to obtain the Dormant Status:
“Inactive Company” means a Company not been carrying 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 return for the last two financial years.
“Significant accounting transaction” means any transaction other than—
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A Company can obtain status through the following:
The Following precondition is required to be fulfilled for making the application for the status of Dormant Company
Convey the Board Meeting with respect to that issue the Board Meeting Notice at least 7 days before the date of Board Meeting.
Hold the Board Meeting and pass the resolution for obtaining the status of Dormant Company subject to the approval of the Shareholder Meeting.
For convening the Shareholder Meeting, fix the date, day, time and venue and authorizing a director or any other person to send the notice to the Members.
Issue the Notice of Shareholder Meeting at least 21 days before the date of the Shareholder Meeting. The shorter notice of Shareholder Meeting can also be called if the consent of at least 95% of such part of the paid-up capital of the Company has given the consent for the same.
Hold the Shareholder Meeting, pass the special resolution for the same with the majority consent of the Shareholder.
After passing the Resolution, file the Form MGT-14 within 30 days from the passing of the special resolution along with certified a true copy of the resolution along with an Explanatory statement, or any other documents as required from time to time if any.
File Form MSC-1 with the Registrar of Companies along with prescribed fees and the Ministry of Corporate Affairs will issue the certificate in MSC-2.
The Registrar will maintain the register of Dormant Companies. If the Company remains Dormant Company for a period of consecutive five years then the Registrar shall initiate the process of striking off the name of the Company.
If the Company intending to do the business in the future or hold an asset/intellectual property, does not have any significant financial transaction or the Company has not filed the annual return for the two consecutive financial years then it can apply for obtaining the status of dormant company and for the same Company can make the application with the Registrar of Companies in the prescribed form. If you need any help with the process get in touch with us.