DORMANT COMPANY
{Section 455 of the Companies Act,
2013 read with Companies (Miscellaneous) Rules, 2014}
[Effective
from 1st April, 2014]
New
Concept and new definition, yes, the Companies Act, 2013 introduced a new
concept i.e. Dormant Company, for the Companies which are registered
under this Act and for the inactive Companies incorporated under the Companies
Act, 1956.
This
concept will help of those companies which are not doing any business activity
for last two years and don’t want their company’s name to be struck off from
the Register of Companies. In the Current situation, this will help the Startup
Companies, who have idea to execute and incorporated the company but want some time
to execute or to accomplish it.
As
per Section 455 of the Companies Act, 2013, where a company is formed and
registered under this Act
1. for a future project, or
2. to hold an asset or intellectual
property, and
3. has no significant accounting
transaction,
Such
a company or an inactive company may make an application to the Registrar in
the Form MSC-1 for the status of a dormant company
“Inactive
company” means a
company which
i.
has
not been carrying on any business or operation, or
ii.
has
not made any significant accounting transaction during the last two financial
years, or
iii.
has
not filed financial statements and annual returns during the last two financial
years;
“Significant Accounting Transaction” means any transaction other than –
(i)
payment
of fees by a company to the Registrar;
(ii)
payments
made by it to fulfill the requirements of this Act or any other law;
(iii)
allotment
of shares to fulfill the requirements of this Act; and
(iv)
Payments
for maintenance of its office and records.
User should ensure that e-Form
MGT-14 must have been filed before for special resolution authorizing for
obtaining dormant status and the company must not be a listed company and also:
a. no inspection, inquiry or
investigation has been ordered or taken up or carried out against 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:
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;
Note: If there is any outstanding unsecured loan, the company may
apply under this rule after obtaining consent/No objection/concurrence of the lender
and enclosing the same with Form MSC-1.
GROUNDS OF APPLICATION
1.
If the company is formed and registered under
the Companies Act, 2013 then please select from one of the options – any future
project or holding as asset or intellectual property and also that the company
did not have any significant transaction since incorporation.
2.
If the company is formed and registered under
the Companies Act, 1956 then select at least one of the followings:
a.
The company has not been carrying on any
business since……………….………………….
b.
The company has not made any significant
accounting transaction since ………………
c.
The company has not filed financial statements and
annual return since……….
POWER
OF ROC
1. In case of a company which has not
filed financial statements or annual returns for two 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.
2.
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.
APPLICATION
FOR OBTAINING STATUS OF DORMANT COMPANY
(i)
The
company may make an application in Form MSC-1 along
with such fee as provided in the Companies (Registration Offices and Fees)
Rules, 2014 (Fee range is from Rs. 2,000/-
to Rs. 20,000/- on the basis of Authorized Share Capital) to the
Registrar for obtaining the status of a Dormant Company within 30 days of 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).
Note: As Date of passing Special Resolution and SRN of MGT-14 is
mandatorily required in the form MSC-1, the Company shall has to mandatorily
required to hold General meeting for passing special resolution. So, there is
no relevance of obtaining consent of at least 3/4th shareholders in
value.
(ii)
Attachments with the forms MSC-1:
a.
Certified true copy of board resolution
authorizing making of this application.
b.
Certified true copy of special resolution
authorizing for obtaining dormant status
c.
Auditor’s certificate
d.
Statement of affairs duly certified by
Chartered Accountant or Auditor(s) of the company
e.
Copy of approval or no objection
certificate (NOC) from the regulatory authority in case company is regulated by
such authority
f.
Latest financial statement and annual
return of the company is mandatory to attach in case the same is filed to
Registrar
g.
Consent of the lender if any loan is
outstanding
h.
Certificate regarding no dispute in the
management or ownership;
i.
Any other document.
(iii)
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.
REGISTER OF DORMANT COMPANIES
The ROC shall maintain a register of
Dormant Companies on www.mca.gov.in website maintained by the Ministry of Corporate Affairs or
any other website notified by the Central Government.
COMPLIANCES AFTER TAKEN OF DORMANT
STATUS
1. A dormant company shall have a
minimum number of three directors in case of a public company, two
directors in case of a private company and one director in case of a One
Person Company.
3.
A
dormant company shall file a “Return of Dormant Company” annually,
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 with following attachments:
a.
Certified true copy of Board resolution
showing authorization given for filing this declaration. (Mandatory)
b. Duly
audited statement of financial position by a chartered accountant in practice. (Mandatory)
c. Any
other information can be provided as an optional attachment(s).
4. The Company shall continue to file
the return or returns of allotment and change in directors 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.
5. The Dormant Company is required to
hold at least 2 Board meeting in a financial year and the gap between the 2 Board
meetings shall not be less than 90 days.
APPLICATION FOR SEEKING STATUS OF AN ACTIVE COMPANY
a.
An application 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 (Fee range is from Rs.
2,000/- to Rs. 20,000/- on the basis of Authorized Share Capital) 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.
b.
The Registrar shall 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 (See
above) 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 in form MSC-3 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.
CONCLUSION
When
an e-Form MSC-4 is processed by the authority concerned, it may be rejected on
the following grounds:
Rejection Code
|
Description
|
1
|
Information given is
incorrect.
|
2
|
Annual filings are not done.
|
3
|
Mandatory filings are not
done.
|
Others
|
In this case the description
is entered by Back Office User.
|
When you see the Help
Manual of E-form MSC-4, you can see the above mentioned Ground of rejection of
the Form. I don’t know why it is the ground of rejection of the form. But, on
the basis of above table, it is clear that Dormant Company is also required to
file Annual Filing Forms i.e. AOC-4 and MGT-7.
Now one question arises
here, why? This question came in my mind because no relaxation is given
to the Dormant Companies in terms of normal Compliances. Dormant company has to retain Minimum Directors,
shall hold at least 2 board meetings as well, any change in share capital and
Directors then also shall have to intimate to the ROC, not relaxation in
holding AGM that is also required to be hold. One formality has already
increased that is to file e-form MSC-3 (Return of Dormant Company), this is
extra burden on the company.
In the Act, it is written
that the company has to pay annual fee that will be paid with the form MSC-3.
Then what is the need to file Annual filing forms? But, this could be known
through practically done.
Contact Details:
VISHAL SHARMA
Company Secretary
Mob: 9716763754
Email: csvishalpbs@gmail.com
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Disclaimer: The Content is prepared on the basis of our general understanding and on the basis of relevant provision of Companies Act, 2013 read with rules made there under. The whole content is only for the knowledge sharing purpose, we do not take any responsibility for the correctness of the same.
Disclaimer: The Content is prepared on the basis of our general understanding and on the basis of relevant provision of Companies Act, 2013 read with rules made there under. The whole content is only for the knowledge sharing purpose, we do not take any responsibility for the correctness of the same.
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