1. Can a Company which will be registered under Companies Act 2013 be classified as Dormant Company?(Or will it apply to only Companies registered under Companies Act 1956?)
2. Can ROC declare a Company as Dormant Company... if so when?
3. What are the procedural requirements for declaring as Dormant Company?
4. How long a Company can remain as Dormant Company?
To know the answers, read the article in full............
DORMANT COMPANY UNDER COMPANIES ACT 2013
By: CS. A.
Mohan Kumar
What is a Dormant Company?
As per Sec. 455, a Dormant company is one
which 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.
(Note: Though the words used here are “Companies registered
under this Act, I hope it covers both the Companies registered under Companies
Act 2013 or Companies Act 1956).
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, or
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—
(a) Payment of fees by a company to the Registrar;
(b) Payments made by it to fulfill the requirements of this
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.
Declaring a Company
as Dormant Company:
A Dormant Company or an Inactive Company as detailed above
can make an application to the Registrar of Companies in the prescribed Form
& with fees for declaring it as a Dormant Company.
As per Sec. 455 (2), Registrar on consideration of the
application shall allow the status of a dormant company and shall issue a
certificate to this effect.
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.
The Dormant Company may become an active company on an
application made in this regard accompanied by such documents and fee as may be
prescribed.
Suo Moto action by
ROC:
Apart from voluntary application of declaring itself to be a
Dormant Company, clause 4 of Section 455 also deliberates a scenario when ROC
can suo moto declare a Company as Dormant Company.
As per Sec. 455 (4), 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.
Further
as per Clause 6 of Sec. 455, 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.
Provisions under
Draft Rules:
Some of the provision related to Dormant Company under the
Draft Rules of the Companies Act 2013 are as follows:
i)
Before applying under Sec 455, Company needs to pass a
Special Resolution at the General Meeting of the Company.
ii)
Minimum Number of Directors is 2 in case of a Private
Limited Company; 3 in case of a Public Limited Company; 1 in case of OPC.
iii)
Dormant Company shall file Annual Declaration in
prescribed Form within 30 days from the closure of Financial year.
iv)
Registrar shall initiate the process of Striking of the
name of the Dormant Company if it continues in Dormant status for 5 years or
more.
v)
If any activity is carried out, within 7 days Director
or the Company need to make an Application to ROC for making it active.
*****************
Dormant Company is certainly an interesting concept and
entrepreneurs who do not intend to do any activity in a Company in the near
future can utilize this provision.
We need to wait and watch whether this concept is used
successfully in India.
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