Procedure for Obtaining Status of Dormant Company | CA services near me | Especia Associates LLP

Procedure for Obtaining Status of Dormant Company:

DORMANT COMPANY: The companies act, 2013 has recognized a new set of companies called dormant companies. As per section 455(1) where a company is formed and registered under this act for future projects or to hold assets or intellectual property and has no significant accounting transactions, 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 to section 455(1): i) Inactive company means a company which has not been carrying on business or operation or has not made any Significant Accounting Transactions during the last 2 preceding financial year or has not filed financial statements and annual returns during the 2 two financial years. ii) “Significant Accounting Transactions’’ means transactions other than:-

a) Payment of fees by the company to the registrar, b) Payment made by it to fulfill the requirement of the act or any other law, c) Allotment of shares to fulfill the requirements of this act, and d) Payments for maintenance of its office and records.

Section 455(4): In case of a company that has not filed financial statements or annual returns for two financial years consecutively, the ROC may issue a notice to such company and enter the name of such company in the register maintained for dormant companies.

APPLICABLE RULE: Companies (miscellaneous) Rules, 2014.

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CONTENTS 1. Conditions For Obtaining Status Of Dormant Company 2. Process To Be Followed For Obtaining Status Of Dormant Company 3. Application For Seeking Status Of An Active Company

1. CONDITION FOR OBTAINING STATUS OF DORMANT COMPANY A company shall be eligible to apply for the status of the dormant company only, if1) No inspection, inquiry, or investigation has been ordered or taken up or carried out against the company.

2) No prosecution has been initiated and pending against the company under any law.

3) The company has not accepted any public deposit which is outstanding nor is the company default in payment thereof or interest thereon.

4) The company is not having any outstanding loan, whether secured or unsecured, if there is any outstanding unsecured loan, the company may apply after obtaining the concurrence of the lender and enclosing the same with form MSC-1.

5) There is no dispute in the management or ownership of the company and the certificate in this regard is enclosed to MSC-1.

6) The company does not have any outstanding statutory dues, taxes, duties, etc.

Payable to the central government or state government or local authority.

7) The company has not defaulted in payment of workmen’s dues.

8) The securities of the company are not listed on any stock exchange within or outside India.

2. PROCESS TO BE FOLLOWED FOR OBTAINING STATUS OF DORMANT COMPANY 1) Call a board meeting to fix the day, time, and venue for the general meeting of the members to pass a special resolution (at least 3/4th in Value), and approve notice for the same.

2) Engage an auditor/chartered account to issue a certificate and authorized any director to make an application to ROC, 3) Hold EGM, Pass special resolution, and File e-form MGT-14 to ROC within 30 days for the same, along with the following attachments:(a) CTC of Special Resolution, (b) Notice of EGM along with Explanatory Statement.

4) After filling of form MGT-14, an application in form MSC-1 should be filed to ROC within 30 days for obtaining the status of the dormant company, along with the following attachments:a) Copy of board resolution authorizing the making of this application. b) Copy of special resolution. c) Auditor's certificate. d) Statement of affairs duly certified by CA or auditor (s) of the company. e) Latest Financial Statement and Annual Return of the company In Case the Same Is Filed To ROC. f) Certificate regarding no dispute in the management or ownership g) Consent of the lender if any loan is subsisting.

5) ROC shall after considering the application and all the documents if consider fit then shall issue a certificate in form MSC-2 allowing the status of the dormant company to the applicant and maintain a register of dormant companies.

6) A dormant company shall have a minimum number of three directors in the case of a public company, two directors in case of a private company, and one director in case of a person company.

Provided that the provision of the act in relation to the rotation of the Auditor shall not apply to the dormant company.

7) The Company shall hold at least one meeting of the Board of Directors in every half year. The gap between the two meetings shall not be more than 90 days.

8) A dormant company shall file a “return of dormant company� annually inter-alia, indicating financial position duly audited by a practicing CA in form MSC-3 along with fees within 30 days from the end of each Financial year. A Dormant Company need not enclose cash flow statements in its annual accounts.

Provided That the Company shall 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 they allot any security to any person or there is any change in the directors.

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3. APPLICATION FOR SEEKING STATUS OF AN ACTIVE COMPANY: 1) For obtaining the status of an active company Form MSC-4 should be filed along with fees and 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.

Provided that ROC 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.

2) ROC, after considering the application shall issue a certificate in Form MSC-5 allowing the status of an active company to the applicant.

3) When a dormant company does or omits to do any act mentioned in the Grounds of application in Form MSC-1 submitted to ROC for obtaining the status of the dormant company, affecting its status of the dormant company, the directors shall within 7 days from such event, file an application, for obtaining the status of an active company.

4) Where the ROC has reasonable cause to believe that any ‘dormant company’ under his jurisdiction has been functioning in any manner, directly or indirectly, may initiate the proceedings for inquiry under section 206 of the Act and if, it is found that the company has actually been functioning, the Roc may remove the name of such company from register of dormant companies and treat it as an active company.

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