Section 455 primarily deals with the provision regarding Dormant Companies. We need to understand inactive companies, first.
INACTIVE COMPANIES (EXPLANATION TO SECTION 455):
An Inactive company is a company which—
(a) has not been carrying on any business or operation, or
(b) has not made any significant accounting transaction during the last two financial years, or
(c) has not filed financial statements and annual returns during the last two financial years.
For the purpose of this definition, “significant accounting transaction” means any transaction other than –
(a) payment of fees by a company to the Registrar;
(b) payments made by it to fulfil the requirements of this Act or any other law;
(c) allotment of shares to fulfil the requirements of this Act; and
(d) payments for maintenance of its office and records.
DORMANT COMPANY (SECTION 445):
Where a company 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, 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.
The Registrar on consideration of the application shall allow the status of a dormant company to the applicant and issue a certificate.
The Registrar shall maintain a register of dormant companies.
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.
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 and may become an active company on an application made in this behalf accompanied by such documents and fee as may be prescribed.
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.
OTHER PROVISIONS
Under Clause (40) of Section 2, for the purpose of Dormant Company, A cash flow statements is not part of their Financial Statements.
Under Sub – section (3) of Section 173, only one meeting of Board of Directors is required in each half of calendar year. There must be a gap of not less than ninety days is required between two board meetings.
Under Section 248, the Registrar may issue a notice to the company of his intention to declare it as a dormant company.
Please note: I welcome your comments and feedback. This blog post is not a professional advice. Readers may share this post on social media by using buttons given here.
AishMGhrana 
Can a listed company fulfilling the criteria be a dormant company. Weather a dormant company is required to file balance sheet annual return etc.C
LikeLike
Act do not differentiate to Listed Company, but requirements of Listing Agreements should be fulfilled.
Yes, Annual Return is required.
LikeLike
I understand that dormant have o file return and pay fees for maintaining dormant status. Thay have also to complay with all other regulations and file documents except that onlty two board meetings are required to be held. What is the benefit of obtaining status of company as dormant company except that only two meetings are to ne held. .
LikeLike
No. Dormant companies are not required to file regular annual returns. Only one return i,e, the Return of Dormant Company is to be filed.
CA. Bhavesh Savla
http://www.cabks.in
LikeLike
Rules are very clear that Listed Companies cant apply for dormant status.
Ca. Bhavesh Savla
http://www.cabks.in
LikeLike
Can a company formed under company act 1956 can be treated as dormant company?
because in law it is written “when a company formed and registered under this act”
LikeLike
Good observation!!
MCA should bring some “order” under Section 470 of the Act.
LikeLike
Section 455(1) starts with the words “where a company is formed and registered under this act…..”. So, the Reply to question of Mr Rishabh Jain dated June 25, 2014 at 4:56 pm seems to be “NO”.
LikeLiked by 1 person
Good Article bt i havnt got tht if company has not filed retrun for precceding two years thn while making application of MSC 1 first we have to file annual returns too. and just a suggestion- if you provide fees too for the same thn it will be very much beneficial for us.
LikeLike
Companies Act, 2013 nowhere specifies whether the appointment of a full-time company secretary is mandatory for a dormant company with a paid up equity capital of more than 5 crore. Since dormant companies are not expected to have any income they cannot employ and remunerate a company secretary. In such a case, exemption from compulsory appointment of a full time company secretary should be given. This lacuna may be pointed out to the Govt authoritries
LikeLike
Pingback: DORMANT COMPANIES | AishMGhrana
HOW TO RE ACTIVATE THE CO. FROM DORMENT
LikeLike
Do these companies require to get its accounts audited?
Also can a dormant status be obtained from the F.Y. 2014-15 because for F.Y. 2013-14 audit must have been conducted?
LikeLike
Please read other posts related to Dormant Companies also. In this post only provisions of Act was discussed.
LikeLike
Hi, Thanks for valuable information. My father was having one firm with parterners. Current status is dormant. There are three directors each with 33% share. Two directors are ready to provide documents for activation. One director is not providing any document and not ready to for activation. Is it possible that with 66% share of two directors , Shall I activate dormant status for this firm? .. Please reply. Thanks in advance.
LikeLike
Board function on majority. go ahead.
Take care of relationship. 🙂
LikeLike
Hi, If anyone want to file a complaint and stop the process of activation of dormant status for private company, the what is the procedure?. I am a director of small firm. Currently status of firm is dormant. Other partners are planning to activate it . Once activation done then they are going to disolve the firm. We are having financial issues with each other. I want to settle down those issues before activation. Is there any way to stop activation process?
LikeLike
Yes, you may write a complaint against other directors detailing your issues.
LikeLike
what is the procedure for resignation of a director in a dormant company and what are the forms to be filed with ?
LikeLike
Same as normal company.
LikeLike
what is the provision regarding acquisition of Dormant Company ?
LikeLike
Sir great article
I want to know what is the benefit of obtaining the status of dormant company??
If we just open a normal company and do not have any significant accounting transaction for 2 years and do not initiate the process of obtaining the status of dormant company??
LikeLike
Less filing and compliances.
LikeLike
Sir,
I wanted to know whether a decree can be executed against a dormant company by a decree holder.
LikeLike
Company is a company, dormant is stage in the life of a company.
In my view a decree may be executed against a dormant company as far as law is concern.
LikeLike
Sir I wanted to know whether a decree holder can execute a decree against a dormant company.
LikeLike
If the company has not filled balance sheet and annual return for last 4 years then will it be required to file the pending roc forms?
Further if the last balance sheet relates to FY 2011-12 then what should be the period for which statment of accounts shall be attached with MSC1
LikeLike
This is a very good article .I want to know whether a company which is in default of submitting annual return and financial statements for the last 10 years and yet to be struck off can make application for becoming a dormant company ? If so, can such application be made before regularisation ?
LikeLike
Please check status with MCA. It may already declared dormant, otherwise inactive.
LikeLike
Sir,
Please provide the specimen of auditor/CA certificate issued to make the company as dormant.
LikeLike
Hi sir,thanks for sharing informatio in a simple way.
is it mandatory for dormant companies to file IT return & ROC Retuns?
LikeLike
No Business, so no income and No tax. In by view but please refer to some tax consultant.
A Simple Roc filing of is required, discussed in Same chapter heading elsewhere on this blog.
LikeLike
Pingback: AishMGhrana: 2015 in review | AishMGhrana
Hi,
I am running a proprietorship business, recently i came to know that another company with same name exists with a dormant status.
Can i continue my business as proprietor and when i want to expand my business and want to make it pvt ltd can i choose another name at that time ? or should i change my business name right now ?
How can i avoid legal issues later, do let me know.
Thanks
LikeLike
There is no legal issue but business issue.
When you will form a company with different name, may need to rebuild goodwill related to existing name.
If one want to grow as company, I would suggest “One Person Company” option.
LikeLike
If a company has not filed IT & Roc Last Year ,And now the company shut down and want to file MSC-1 ,Whether The Company has to file Previous Year Returns ?
LikeLike
Yes
LikeLike
Does the company have to file form ADT1 for appointment of auditor?
LikeLike
Yes.
LikeLike
Procedure of dormant to active status. as our company has not filed annual return and financial statements for the last 4 yrs and now co. wants to file but in master data the status is dormant . so how to convert dormant into active
LikeLike
Please Read:
https://aishmghrana.me/2014/08/28/dormant-companies-2/ also.
You may please file Form MSC – 4.
LikeLike
Suppose a Company has paid up capital of Rs. 10 crore or more which means that there is a need for Committees like Audit Committee and NRC, Independent Director, KMPs. If such company applies for dormant status, will these requirements stll exist? Or will have to reduce the capital before applying?
LikeLike
To my interpretation, no such requirement shall apply to a dormant status company after applying so.
LikeLike
Pingback: Provisional Registration of Company | AishMGhrana