{"id":3406,"date":"2020-02-14T10:16:56","date_gmt":"2020-02-14T10:16:56","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=3406"},"modified":"2021-04-22T15:03:19","modified_gmt":"2021-04-22T09:33:19","slug":"change-in-status-of-company-from-active-to-dormant","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/change-in-status-of-company-from-active-to-dormant\/","title":{"rendered":"Change in Status of Company From Active to Dormant"},"content":{"rendered":"\n<p class=\"has-drop-cap\">A company which is a registered entity but is\nnot currently active is called as a Dormant Company. Section 455(1) of the\nCompanies Act, 2013 has introduced the concept of a dormant company.<strong><\/strong><\/p>\n\n\n\n<p><strong>1.<\/strong> A Company incorporated under <strong>Companies Act, 2013<\/strong><sup><a href=\"https:\/\/www.mca.gov.in\/Ministry\/pdf\/CompaniesAct2013.pdf\">[1]<\/a><\/sup><strong> <\/strong>and not having any significant accounting transaction.<\/p>\n\n\n\n<p>\u201c<strong><em>Significant\naccounting<\/em><\/strong><em>\n<strong>transaction<\/strong><\/em>\u201d\nhereby means any transaction other than\u2014<\/p>\n\n\n\n<ul><li>Any payment of fees by the company to Registrar;<\/li><li>Any Payments which is to be made to carry out the\nrequirements of this Act or any other law;<\/li><li>Shares have been allotted to carry the requirements of this\nAct; and<\/li><li>Any Payments made for the maintenance of its office and\nrecords<\/li><\/ul>\n\n\n\n<p><strong>2.<\/strong> A Company Incorporated for purpose of holding an asset;<\/p>\n\n\n\n<p><strong>3. <\/strong>A Company Incorporated for a future project; or<\/p>\n\n\n\n<p> <strong>4.<\/strong> Any Inactive Company <\/p>\n\n\n\n<p><strong><em>\u201cinactive\ncompany <\/em><\/strong>\u201d means any company which has not made any significant\naccounting transaction during the last two financial years, or not been\ncarrying on any business or operation of the Company has not filed financial\nstatements and annual returns for the last two financial years;\n<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/change-in-status-of-company-from-active-to-dormant\/#Eligibility_for_a_Dormant_Company\" >Eligibility for a Dormant Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/change-in-status-of-company-from-active-to-dormant\/#Conditions_to_be_satisfied_for_Dormant_Status\" >Conditions to be satisfied for Dormant Status<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/change-in-status-of-company-from-active-to-dormant\/#Exemptions_to_a_Dormant_Company\" >Exemptions to a Dormant Company:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/change-in-status-of-company-from-active-to-dormant\/#Procedure_for_Conversion_of_Active_Company_to_Dormant_Company\" >Procedure for Conversion of Active Company to Dormant Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/change-in-status-of-company-from-active-to-dormant\/#Company_can_Do_Following_Business_Transation_in_the_Period_of_Dormant\" >Company can Do Following Business Transation in the Period of Dormant<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/change-in-status-of-company-from-active-to-dormant\/#Return_of_Dormant_Companies\" >Return of Dormant Companies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/change-in-status-of-company-from-active-to-dormant\/#How_can_a_company_apply_for_seeking_active_status\" >How can a company apply for seeking active status?<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Eligibility_for_a_Dormant_Company\"><\/span>Eligibility for a Dormant Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>&nbsp;A Company which has not been in working for several financial years and also does not intends to do in future for five consecutive years can apply for Dormant Company Status. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/proprietorship-firm-vs-private-limited-company\/\">Proprietorship Firm vs. Private Limited Company: Key Differences<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conditions_to_be_satisfied_for_Dormant_Status\"><\/span>Conditions to be satisfied for Dormant Status<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>The following conditions should be satisfied before applying for Dormant Status:<\/em><\/strong><\/p>\n\n\n\n<ol><li>&nbsp;There should <strong>not be any<\/strong> <strong>inspection\/ inquiry \/investigation<\/strong> &nbsp;going &nbsp;against the company;<\/li><li>The company should <strong>not have any public deposits<\/strong> which are outstanding, nor the Company should not have made any <strong>default in payment<\/strong> of interest thereon;<\/li><li>There should <strong>not be any prosecution<\/strong> pending with the company under any law;<\/li><li>The company should <strong>not have any default for the payment of workmen\u2019s dues<\/strong>;<\/li><li>The company should <strong>not have any outstanding statutory taxes, dues, duties etc<\/strong>.&nbsp; which is to be paid to Central Government or any State Government or any local authorities etc.;<\/li><li>The application has <strong>not been made with a motive to deceive<\/strong> the creditors or to defraud any other person;<\/li><li><strong>Securities<\/strong> of the company <strong>should not be listed on any stock exchange in India or outside India;<\/strong><\/li><li>A company should <strong>not have any outstanding loan<\/strong>, Secured and Unsecured-if company has any&nbsp;<strong>Outstanding Unsecured Loan, <\/strong>then NOC should be obtained from the lender, and then it can apply for status of DORMANT<strong> lender. <\/strong>NOC is required to be attached in the Form which is required to be filed with ROC.<\/li><li>There should <strong>not be any discussion in the Management or Ownership<\/strong> with such Company; <\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Exemptions_to_a_Dormant_Company\"><\/span>Exemptions to a Dormant Company:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>The following exemptions are provided to a Dormant Company:<\/em><\/strong><\/p>\n\n\n\n<ul><li>&nbsp;<strong>Cash Flow Statement is not required-<\/strong>A company, in a status of Dormant is not required to show Cash Flow Statements in Company\u2019s Financial Statements.<\/li><\/ul>\n\n\n\n<ul><li>&nbsp;<strong>Board Meetings \u2013<\/strong> Dormant Company, has to convene only <strong>one meeting of Board of Directors in each half of the calendar year<\/strong>. There should be a gap of not less than ninety days between two board meetings.<\/li><\/ul>\n\n\n\n<ul><li><strong>Rotation of directors shall not apply to dormant companies.<\/strong><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Procedure_for_Conversion_of_Active_Company_to_Dormant_Company\"><\/span>Procedure for Conversion of Active Company to Dormant Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>1.<\/strong> <strong>Convene Board Meeting- to call EGM<\/strong><\/p>\n\n\n\n<ul><li>Authorization to the director to make an application for Dormant with ROC<\/li><li><strong>&nbsp;<\/strong>Issue Notice of General Meeting<\/li><li>Engage a Chartered Accountant to issue a certificate<\/li><\/ul>\n\n\n\n<p><strong>&nbsp;2.<\/strong> <strong>Hold Extra Ordinary General Meeting<\/strong><\/p>\n\n\n\n<ul><li>Pass Special Resolution<\/li><\/ul>\n\n\n\n<p><strong>3. File E-form MGT-14 with ROC.<\/strong><\/p>\n\n\n\n<p><strong>Attachment: <\/strong><\/p>\n\n\n\n<ul><li>CTC of\nSpecial Resolution<\/li><li>Notice of\nEGM along with Explanatory Statement.<\/li><\/ul>\n\n\n\n<p><strong>4. <\/strong>After filling of form MGT-14, &nbsp;we need to File Form&nbsp;<strong><em>MSC-1<\/em><\/strong> with the registrar<\/p>\n\n\n\n<p><strong><em>Attachments:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<\/em><\/strong><\/p>\n\n\n\n<ul><li>CTC of Board Resolution.<\/li><li>CTC of Special Resolution.<\/li><li><a href=\"https:\/\/corpbiz.io\/learning\/alteration-of-memorandum-of-association-moa\/\"><strong>Memorandum of Association<\/strong><\/a><\/li><li>Auditor\u2019s Certificate.<\/li><li>Statement of Affairs duly certified by Auditor of the company.<\/li><li>Latest Annual Return and <a href=\"https:\/\/corpbiz.io\/learning\/basic-financial-statements\/\"><strong>Financial Statements<\/strong><\/a> of the Company.<\/li><li>Certificate in reference with &nbsp;no dispute in the management or ownership.<\/li><li>If there is any Loan outstanding, Consent of lender needs to be attached. <\/li><\/ul>\n\n\n\n<p><strong>5.<\/strong> <strong><em>Certificate of Status of dormant Company:<\/em><\/strong><\/p>\n\n\n\n<p>The Registrar will issue a certificate in <strong>Form MSC-2<\/strong> allowing the status of a Dormant Company to the applicant, after considering the application filed in <strong>Form MSC-1<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Company_can_Do_Following_Business_Transation_in_the_Period_of_Dormant\"><\/span>Company can Do Following Business Transation in the Period of Dormant<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Company\ncan&nbsp; pay fees&nbsp; to the Registrar;<\/li><li>Any Payments\n&nbsp;for the fulfil of any requirements of\nthis Act or any other law; <\/li><li>Allotment of\nshares as per the requirements of this Act; and<\/li><li>Any Payments\nmade for maintenance of its office and records<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Return_of_Dormant_Companies\"><\/span>Return of Dormant Companies<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>A&nbsp;dormant\ncompany needs to <strong>file a declaration annually <\/strong>duly\ncertified by a Chartered Accountant in practice<strong>\nin Form No. MSC-3 within 30 days<\/strong> from the end of each fiscal year,\nindicating the financial position.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_can_a_company_apply_for_seeking_active_status\"><\/span><strong>How can a company apply for seeking active status? <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>An application has to be filed if a company&nbsp;<strong><em>wants to get Active status with ROC in<\/em> e-form&nbsp;<em>MSC-4<\/em>.<\/strong><\/li><li>Registrar, after considering the application filed shall issue the certificate in Form MSC-5 to the applicant allowing status of an active company.<\/li><li>&nbsp;If company is carrying any&nbsp;<strong>\u201cSignificant transaction\u201d<\/strong>&nbsp;during the dormant period, the directors need to file an application with ROC in e-form MSC-4&nbsp;<strong>within seven days<\/strong>&nbsp;from such event, for obtaining the status of an active company.<\/li><\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/online-public-limited-company-registration-process-in-india\/\">Public Limited Company Registration Process in India<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A company which is a registered entity but is not currently active is called as a Dormant Company. Section 455(1) of the Companies Act, 2013 has introduced the concept of a dormant company. 1. A Company incorporated under Companies Act, 2013[1] and not having any significant accounting transaction. \u201cSignificant accounting transaction\u201d hereby means any transaction [&hellip;]<\/p>\n","protected":false},"author":14,"featured_media":3409,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[313],"acf":{"service_id":"220"},"authorName":"Priya Tirthani","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/Priya-Tirthani.jpg","authorDescription":"Ms. Priya Tirthani is a Company Secretary working as a Senior Consultant in Corpbiz.She is having 4 years of Post Qualification Experience in Compliance and Audit.","postViews":11883,"readingTime":3,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/3406"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=3406"}],"version-history":[{"count":19,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/3406\/revisions"}],"predecessor-version":[{"id":29284,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/3406\/revisions\/29284"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/3409"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=3406"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=3406"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=3406"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}