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Dormant Procedure
Dormant Procedure
Section-455 of Companies Act, 2013 talks about a New Provision Calls DORMANT
COMPANY. This concept was not there in Companies Act, 1956. Another Name of this
concept by Professionals is ASSET SHIELDING CONCEPT UNDER COMPANIES
ACT 2013.
A Dormant Company offers excellent advantage to the promoters who want to hold
an asset or intellectual property under the corporate shield for its usage at a later
stage. For instant: if a promoter wants to buy lands now for its future project at a
comparatively lesser price, he may do the same through dormant company so that he
can use the land for its future project. Thus, dormant company status is a new
phenomenon in the Companies Act 2013 and is an excellent tool for keeping assets in
the company for its future usage. A dormant company may be either a public company
or a private company or a one person company.
There are around 1.5 lakh dormant companies present in Indian corporate sector
according to recent government data which are either incorporated for future project or
to hold only IPRs or assets. Some are yet to carry out the operations or are in
operational stage for a fair period of time. It is not always that by dormant companies it
is meant that they are defunct. They were just not in operation because of the nature of
business they perform.
Certain companies, due to the nature of their business, may not be able to start any
business, for a long time from the date of incorporation as for instance any business for
creation of intellectual property or for a future project and has no significant accounting
transaction. Such a company may be an Inactive company.
Construction Companies/ Real Estates companies Incorporate New companies to Hold
Land/ Properties for future projects. This concept is Beneficial for them, by this Concept
they can Incorporate Company and Purchase Property/Land in that company and get
status of Dormant Company, if a company get status of dormant company there are
less compliance in dormant company in comparison of active company. It will help to
save cost of compliances for inactive companies.
Bare Act Language: According to Section 455 of the Companies Act 2013, where a
company is formed and registered under this Act for a future projector 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.
Procedure for Obtaining Status of DORMANT COMPANY is given below:Before
discussion of Process of Obtaining Status of Dormant Company Lets Discuss some
important TERMS:
INACTIVE COMPANY: 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,
has not filed Financial Statements and Annual Returns during the LAST
TWO FINANCIAL YEARS.
SIGNIFICANT ACCOUNTING TRANSACTION: Significant Accounting Transaction
means any transaction other than
Payment of Fees by a company to the Registrar;
Payments made by it to fulfill the requirements of this Act or any other law;
Allotment of shares to fulfill the requirements of this Act; and
Payments for maintenance of its office and records.
Above Mention Transactions are excluded from Significant Accounting Transactions. If
a company has made above mention transactions in last two year then also that
company will fall under definition of Inactive Company.
THE COMPANY MAY CARRY FOLLOWING BUSINESS TRANSACTION IN THE
PERIOD OF DORMANT:
After filling of form MGT-14, File Form MCS-1 with the registrar.
Attachments:
Processing Type
The eForm will be auto approved (STP).
Email
When an eForm is approved/ rejected by the authority concerned, an acknowledgement
of approval/rejection with related documents is sent to the user in the form of an email
to the email id of the company.
Certificate
A system generated Certificate of status of a Dormant Company is issued by Registrar
and sent to the user as an attachment to the email, after approval is granted. Once the
form is approved the status of the company shall be changed to Dormant under section
455
(Application to ROC for obtaining the status of dormant company)
The Companies (Registration Offices and Fees) Rules, 2014
Application made Other than OPC & Small OPC & Small
company company