Overview Dormant Company under the company Act

Dormant Company

Meaning of Dormant Company

The word “Dormant” means inactive or inoperative. A dormant company is an excellent opportunity to start a  company for a future project or hold an asset/intellectual  property without having significant accounting  transactions. On the other hand if a company has not filed  its annual returns for two consecutive years then such a  company will also be called as a dormant company.

Inactive Company means:-

• The Company has not been carrying on any business or operation during the last two or more financial years.
• The company has not made any significant accounting transaction during the last two or more financial years.
• The company has not filed financial statements and annual returns during the last two or more financial years.

“Significant accounting transaction” means any transaction other than—

• Payment of fees by a company to the Registrar;
• Payments made by it to fulfil the requirements of Companies Act or any other law;
• Allotment of shares to fulfil the requirements of Companies Act; and
• Payments for maintenance of its office and records.

Eligibility to apply for Dormant Status:-

• 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 the company is in default in payment  thereof or interest thereon;
• The company is not having any outstanding loan, whether secured  or unsecured: Provided that if there is any outstanding unsecured  loan, the company may apply under this rule after obtaining  consent of the lender;
• 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.

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