Dormant company (Section 455 of the Companies Act, 2013) :
A new section 455 of the Companies Act, 2013 provides for Dormant Company. According to this section:
(i) Status as a dormant company: Where a company is formed and registered under this Act for a future project or to hold an asset or intellectual property and has no significant accounting transaction, such a company or an inactive company may make an application to the Registrar in such manner as may be prescribed for obtaining the status of a dormant company.
Explanation.—For the purposes of this section,—
(a) “inactive company” means a company which has not been carrying on 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 returns during the last two financial years;
(b) “significant accounting transaction” means any transaction other than—
(1) payment of fees by a company to the Registrar;
(2) payments made by it to fulfill the requirements of this Act or any other law;
(3) allotment of shares to fulfill the requirements of this Act; and
(4) payments for maintenance of its office and records.
According to the Rule 3 of the Companies (Miscellaneous) Rules, 2014, a company may make an application in Form MSC-1 along with such fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 to the Registrar for obtaining the status of a Dormant Company in accordance with the provisions of section 455 after passing a special resolution to this effect in the general meeting of the company or after issuing a notice to all the shareholders of the company for this purpose and obtaining consent of at least 3/4th shareholders (in value).
A company shall be eligible to apply under this rule only, if –
(a) no inspection, inquiry or investigation has been ordered or taken up or carried out a gainst the company;
(b) no prosecution has been initiated and pending against the company under any law;
(c) the company is neither having any public deposits which are outstanding nor the company is in default in payment thereof or interest thereon;
(d) the company is not having any outstanding loan, whether secured or unsecured:
However if there is any outstanding unsecured loan, the company may apply under this rule after obtaining concurrence of the lender and enclosing the same with Form MSC-1;
(e) there is no dispute in the management or ownership of the company and a certificate in this regard is enclosed with Form MSC-1;
(f) 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.;
(g) the company has not defaulted in the payment of workmen‟s dues;
(h) the securities of the company are not listed on any stock exchange within or outside India.
(ii) Certificate of status of dormant company: The Registrar on consideration of the application shall allow the status of a dormant company to the applicant and issue a certificate in such form as may be prescribed to that effect.
According to the Rule 4 of the Companies (Miscellaneous) Rules, 2014, the Registrar shall, after considering the application filed in Form MSC-1, issue a certificate in Form MSC-2 allowing the status of a Dormant Company to the applicant .
(iii) Register of dormant company: The Registrar shall maintain a register of dormant companies in such form as may be prescribed.
According to the Rule 5 of the Companies (Miscellaneous) Rules, 2014, the Register maintained under the portal maintained by the Ministry of Corporate Affairs on its web-site www.mca.gov.in or any other website notified by the Central Government, shall be the register for dormant companies.
(iv) Consequences of non filing of annual returns or financial statements: In case of a company which has not filed financial statements or annual returns for 2 financial years consecutively, the Registrar shall issue a notice to that company and enter the name of such company in the register maintained for dormant companies.
According to the Rule 7 of the Companies (Miscellaneous) Rules, 2014, a dormant company shall file a “Return of Dormant Company” annually, inter alia, indicating financial position duly audited by a chartered accountant in practice in Form MSC-3 along with such annual fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 within a period of 30 days from the end of each financial year.
The company shall also continue to file the return or returns of allotment and change in directors in the manner and within the time specified in the Act, whenever the company allots any security to any person or there is any change in the directors of the company.
(v) Directors of dormant company: A dormant company shall have such minimum number of directors, file such documents and pay such annual fee as may be prescribed to the Registrar to retain its dormant status in the register and may become an active company on an application made in this behalf accompanied by such documents and fee as may be prescribed.
According to Rule 6 of the Companies (Miscellaneous) Rules, 2014, a dormant company shall have a minimum number of 3 directors in case of a public company, 2 directors in case of a private company and 1 director in case of a One Person Company.
Rotation of auditors: According to Rule 6 the Companies (Miscellaneous) Rules, 2014, the provisions of the Act in relation to the rotation of auditors shall not apply on dormant companies.
Application for seeking status of an active company: According to the Rule 8 of the Companies (Miscellaneous) Rules, 2014,
(a) An application for obtaining the status of an active company shall be made in Form MSC- 4 along with fees as provided in the Companies (Registration Offices and Fees) Rules, 2014 and shall be accompanied by a return in Form MSC-3 in respect of the financial year in which the application for obtaining the status of an active company is being filed:
However, the Registrar shall initiate the process of striking off the name of the company if the company remains as a dormant company for a period of consecutive 5 years.
(b) The Registrar shall, after considering the application filed for obtaining the status of an active company, issue a certificate in Form MSC-5 allowing the status of an active company to the applicant.
(c) Where a dormant company does or omits to do any act mentioned in the Grounds of application in Form MSC-1 submitted to Registrar for obtaining the status of dormant company, affecting its status of dormant company, the directors shall within 7 days from such event, file an application for obtaining the status of an active company.
(d) Where the Registrar has reasonable cause to believe that any company registered as “dormant company‟ under his jurisdiction has been functioning in any manner, directly or indirectly, he may initiate the proceedings for enquiry under section 206 of the Act and if, after giving a reasonable opportunity of being heard to the company in this regard, it is found that the company has actually been functioning, the Registrar may remove the name of such company from register of dormant companies and treat it as an active company.
(vi) Striking off the name by the Registrar: The Registrar shall strike off the name of a dormant company from the register of dormant companies, which has failed to comply with the requirements of this section.