Any company whether it is a limited, private limited or a one person company has the option of registering itself as a dormant company and would be eligible to avail few exemptions which have been declared under mandatory compliances.
The status of a dormant company can be availed by enterprises that are registered to hold an intellectual property or an asset but do not have significant accounting transactions.
In this particular article, we will brief the process of registering as a dormant company in India and its benefits.
When a corporation wants to declare itself inactive, it means:
Therefore, any company which wishes to become an asset company without having any significant business transactions can apply to get the status of a dormant company.
Any company whether limited, private limited or a one-person company can apply for declaring itself a dormant company only if the following criteria are met:
To obtain the legal status of a dormant company, the following steps are to be followed:
Dormant companies are mandatorily required to file a “Return of Dormant Company” at the end of each financial year before April 30th with the Ministry of Corporate Affairs.
This return of dormant company should necessarily include detail of the financial position of that particular business which should be duly audited by a professional Chartered Accountant. This filing is done using Form MSC-3.
To restore the status of an active company, an application is required to be given to the Registrar in form MSC-4.
In case, the Registrar is satisfied with the same; then the company will be restored to its active status by issuing MSC-5.
Once any company is registered as a dormant company; the annual return for the company can be legally filed using a simplified form MSC-3.
Also, the total number of Board Meetings to be conducted by the Company reduces considerably and the compliance burden is lessened to a certain extent.