Overview Dormant Company under the company Act
Table of Contents
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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