Dormant Company Status Filing
Stay Compliant While Inactive

Want to keep your business legally registered without running daily operations?
Opting for Dormant Company Status is the ideal solution for companies that are currently inactive but wish to retain their legal existence. As per the Companies Act, 2013, applying for dormant status minimizes compliance requirements, secures your company name, and helps you avoid penalties or removal by the ROC. At Udyog Suvidha Kendra, we provide complete assistance for smooth and accurate Dormant Company status filing.

Dormant Status Filing

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Dormant Status Filing Application

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Dormant Status Filing

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What is a Dormant Company?

Dormant Company status is a provision under the Companies Act, 2013, allowing companies to remain legally registered without active business operations. This status is ideal for businesses that are not currently trading but wish to preserve their corporate identity, intellectual property, or future business plans. Filing for Dormant Company status ensures compliance with the Ministry of Corporate Affairs (MCA) while significantly reducing the compliance burden and avoiding hefty penalties for non-filing.

Definition Under Companies Act, 2013

According to Section 455 of the Companies Act, 2013, a Dormant Company refers to a company that is formed and registered for a future project or to hold an asset/intellectual property and has no significant accounting transactions. Such companies can apply to the Registrar of Companies (ROC) to obtain dormant status, keeping their registration active while remaining non-operational.

Who Should Consider Dormant Status?

Dormant status is suitable for:

  1. Companies formed for future projects or investments.
  2. Startups not yet operational but intending to commence later.
  3. Businesses holding assets, trademarks, or IP rights.
  4. Companies undergoing restructuring or strategic pause.
  5. Firms temporarily halting operations to reduce costs.

Applying for dormant status helps these companies stay compliant without the full burden of active business regulations.

Dormant vs Inactive Company – Key Differences

Dormant Company Inactive Company
Voluntarily declared status through Form MSC-1 Not automatically declared; may be non-compliant
Recognized legally with reduced compliance May be struck off for continued inactivity
Meant for asset-holding or future projects Usually businesses that ceased operations
Filing required to maintain status No formal filing leads to defaulting status
Avoids ROC penalties and strike-off High risk of penalties and legal notices

Understanding the distinction is crucial for choosing the right course of action to maintain your company legally and efficiently.

Eligibility Criteria Dormant Status

Filing for Dormant Company status in India is a strategic choice for businesses that want to maintain legal existence without actively operating. The Ministry of Corporate Affairs (MCA) has laid down specific eligibility criteria under the Companies Act, 2013 that a company must fulfill to obtain dormant status. Below is a comprehensive overview of the conditions your company must meet to qualify:

No Business Operations for 2 Years

The company must not have engaged in any commercial, business, or operational activities for at least two consecutive financial years. This includes the absence of:

  • Revenue-generating transactions
  • Purchase or sale of goods and services
  • Execution of client projects or contracts
  • Operational bank account movements (except statutory payments)

The intention behind this requirement is to restrict dormant status to only those companies that are truly inactive in their commercial functioning.

No Business Operations
No Financial Transactions

No Significant Financial Transactions

The company must not have carried out any significant accounting transactions during the period of inactivity. Only the following transactions are permitted while applying for dormant status:

  • Payment of fees to the Registrar of Companies (ROC)
  • Allotment of shares to comply with statutory obligations
  • Payment to maintain the company’s registered office
  • Bank charges or compliance-related professional fees

Any transactions outside these categories, such as issuing invoices, taking loans, or conducting trade, may disqualify the company from being declared dormant.

Shareholder & Director Approval Required

Obtaining dormant status requires internal corporate approval. A special resolution must be passed in a duly convened general meeting by the shareholders. In addition:

  • Directors must provide formal approval
  • The resolution must be filed with the ROC using Form MGT-14
  • Consent of at least 3/4th in value of the shareholders is mandatory

This ensures that all stakeholders are aligned in the decision to temporarily suspend business operations while maintaining corporate identity.

Shareholder Approval
Filing History

Filing History Must Be Up-to-Date

Before applying for dormant status, the company must ensure that all prior statutory compliance filings are complete and updated. This includes:

  • Annual Returns (Form MGT-7)
  • Financial Statements (Form AOC-4)
  • Tax filings and GST (if applicable)
  • Director KYC and DIN compliance

Companies with overdue returns, pending penalties, or active litigation may be disqualified from applying until all issues are resolved.

No Ongoing Investigation or Default

The company must not be under any form of regulatory scrutiny, investigation, or legal default. If the business is currently facing any action under the Companies Act, FEMA, or taxation laws, the application for dormant status will not be accepted by the MCA.

Documents Required for Dormant Company Filing

Below is the list of essential documents required to file for Dormant Company status under the Companies Act, 2013 with a brief description for each:

1. Board Resolution Copy

Approving the decision to apply for dormant status.

2. Shareholders’ Special Resolution (MGT-14)

Filed with ROC, authorizing the status change.

3. Statement of Affairs (Form MSC-1)

A declaration of the company’s current financial position.

4. Certificate of No Debt or Liabilities

Confirmation that the company has cleared all outstanding dues.

5. Auditor’s Certificate

Certifying that there have been no significant transactions in recent years.

6. Consent Letters from Directors

Approval from all directors for dormancy filing.

7. PAN Card of the Company

Identity proof of the company for ROC verification.

8. Latest Financial Statements

Audited financials showing no major business activity.

9. Updated Annual Filings (MGT-7 & AOC-4)

Ensures all previous compliance is up to date.

10. Proof of Registered Office Address

For verification of active business premises.

Step-by-Step Process for Dormant Status Filing

1

Hold a Board Meeting

Conduct a board meeting to discuss the company’s intent to apply for dormant status due to inactivity. Pass a board resolution and approve the notice for calling an Extraordinary General Meeting (EGM) of shareholders.

2

Pass Special Resolution in EGM

Organize an EGM and pass a special resolution authorizing the filing of dormant status under Section 455 of the Companies Act, 2013. This resolution must be filed with the ROC through Form MGT-14 within 30 days.

3

Ensure Filing Compliance

Make sure that all previous annual returns, financial statements, and ROC filings are completed and up to date. A company with pending compliance issues is not eligible for dormant status.

4

Prepare Required Documentation

Gather all mandatory documents such as the board resolution, special resolution, auditor’s certificate stating no liabilities, declaration from directors, and a financial statement showing no major transaction for the past two years.

5

File Form MSC-1 with ROC

Submit Form MSC-1 on the Ministry of Corporate Affairs (MCA) portal along with the prescribed fee. Attach all supporting documents including proof of resolutions and a no-dues certificate from the statutory auditor.

6

ROC Review and Approval

The Registrar of Companies will examine your application and documents. If everything is found satisfactory, the ROC will issue a certificate of dormant status in Form MSC-2, confirming your company is now officially dormant.

7

File Annual Return in Form MSC-3

Even as a dormant company, you must file Form MSC-3 annually to report financial position and retain dormant status. Non-filing may lead to cancellation of dormant recognition and possible penalties.

Annual Compliance for Dormant Companies

Dormant companies, though inactive in operations, are not exempt from all regulatory obligations. To retain their dormant status under the Companies Act, 2013, they must follow a streamlined set of annual compliance requirements. These ensure continued legal recognition and prevent penalties or cancellation of status by the Registrar of Companies (ROC).

1

Filing of MSC-3

Every dormant company is required to file Form MSC-3 annually with the ROC. This return provides a declaration of financial position and confirms that the company has not undertaken any significant accounting transactions. Timely submission helps maintain compliance and avoid conversion back to active status.

2

Maintenance of Minimum Directors

As per law, a dormant private company must have at least two directors, and a dormant public company must have three directors. Their details must be kept up to date with the ROC, and any change in directorship should be properly filed to maintain compliance.

3

No Active Business Transactions

Dormant companies must refrain from any active commercial activity such as issuing invoices, receiving payments, or making investments. Only essential transactions like payment of fees to the ROC, maintaining registered office, or director remuneration are allowed without affecting dormant status.

4

Filing Financial Statements and Annual Returns

Even if the company is dormant, filing of financial statements and annual returns in simplified form is mandatory. While the content is minimal, non-compliance may lead to penalties or withdrawal of dormant recognition. Accurate records ensure transparency and smooth reactivation when needed.

Procedure to Reactivate a Dormant Company

Convene a Board Meeting

The first step is to hold a Board Meeting to pass a resolution for reactivation. The board must approve the decision to change the company's status from dormant to active and authorize a director to initiate the reactivation process.

File an Application in Form MSC-4

Submit Form MSC-4 with the Registrar of Companies (ROC). This form is the formal application requesting reactivation. It must be filed along with the necessary attachments, such as the Board Resolution and a declaration of intent to resume business operations.

Ensure Compliance of Pending Filings

Before approval, the company must ensure that all past due returns and financial statements are filed, and any default penalties are cleared. This includes ROC forms like AOC-4 and MGT-7, if not submitted during the dormant period.

ROC Verification and Scrutiny

The ROC will scrutinize the application and check for accuracy, completeness, and compliance with relevant laws. Any discrepancies may lead to objections or additional document requests that must be addressed promptly.

Certificate of Active Status (MSC-5)

Once the ROC is satisfied, it issues a Certificate of Active Status (Form MSC-5), officially changing the company's classification. The business can now begin normal operations and is subject to standard compliance requirements moving forward.

Penalties for Non-Compliance

Failing to comply with the regulations surrounding dormant company status can lead to serious repercussions under the Companies Act, 2013. Below are the key penalties and consequences:

Penalties on the Company: If a dormant company fails to meet mandatory requirements such as filing MSC-3 or maintaining minimum directors, the company can face a penalty of ₹10,000, with an additional ₹1,000 per day of default, up to a maximum limit.

Penalties on Directors: Each director of the non-compliant dormant company is individually liable for fines similar to those imposed on the company. Non-compliance with filing obligations or false declarations may also lead to disqualification under Section 164.

Loss of Dormant Status: The Registrar of Companies (ROC) has the authority to strike off the company’s name from the register or revoke dormant status if the company fails to follow prescribed norms, thereby forcing it into winding-up proceedings.

Legal Action by ROC: The ROC may initiate prosecution against the company and its officers for continued default or misrepresentation. This can lead to extended legal battles and damage to the company's reputation.

Increased Future Compliance Burden: Once marked as non-compliant, a company may be subjected to increased scrutiny, higher penalties for future defaults, and loss of eligibility for certain benefits like easy reactivation or simplified closure.

Penalties Illustration

How Udyog Suvidha Kendra Helps with Dormant Filing

Udyog Suvidha Kendra simplifies the dormant company filing process by providing expert advisory, form filing, and post-approval compliance tracking to ensure your business remains legally compliant without active operations.

1

Expert Legal & Compliance Advisory

Our team of experts provides in-depth guidance on eligibility, legal obligations, and filing procedures. We help you assess whether dormant status is ideal for your business and assist with board resolutions and documentation.

2

Filing Support for MSC-1, MGT-14 & Others

We handle the entire filing process, including preparation and submission of MSC-1, MGT-14, and required annexures. Our professionals ensure that each form is accurately filled, digitally signed, and submitted on time to avoid penalties.

3

Compliance Monitoring and Annual Reminders

Once your company is granted dormant status, we help you stay compliant with MSC-3 filing, financial disclosures, and director requirements. Our reminder system ensures you never miss a deadline, keeping your dormant status intact and penalty-free.

Dormant Status Filing Registration FAQs

What is a dormant company under the Companies Act, 2013?
A dormant company is one that has no significant financial transactions for two consecutive years and applies to retain legal status without active operations. It helps reduce compliance while preserving the business identity.
Companies with no business activity or significant financial transactions for at least two years can apply. The company must also be up to date with filings and have the approval of shareholders and directors.
Filing helps protect the company name, reduce compliance costs, and avoid penalties for inactivity. It's a strategic option for businesses that plan to resume operations in the future but are currently inactive.
To file for dormant status, a company must submit Form MSC-1 along with the required documents to the Registrar of Companies (ROC) as per the Companies Act, 2013.
Yes, a government filing fee is applicable depending on the company’s authorized capital. Additional professional or consultancy charges may also apply if availing expert assistance.
No, a dormant company must not have any significant financial transactions, including bank operations. Only essential payments like ROC fees or maintenance expenses are permitted.
A company can remain dormant for up to five consecutive years. After this period, it must either become active or face potential strike-off by the ROC if compliance is not maintained.
Dormant companies must file MSC-3 annually, maintain minimum two directors, and submit financial statements and annual returns, even though no business activities are conducted.
Yes, a dormant company can apply for active status by filing Form MSC-4, fulfilling compliance conditions, and submitting necessary documents and board resolutions to the ROC.
An inactive company may not operate but hasn’t filed for dormant status. A dormant company is officially recognized as inactive by the ROC after following the proper legal procedure under the Companies Act.
Yes, board and shareholder approvals are mandatory for filing dormant status. The company must pass a special resolution and attach the certified copy with the MSC-1 form.
Documents include board resolution, shareholder approval, latest financial statements, affidavit from directors, and certificate of no dispute on company name. All must be filed correctly with the ROC.
Yes, a dormant company can retain assets like trademarks, copyrights, or patents. Dormant status helps preserve such IP while reducing operational burden.
Non-compliance leads to penalties and possible strike-off by the ROC. It may also restrict the company from returning to active status without additional fees and formalities.
Udyog Suvidha Kendra offers complete support from documentation to ROC filings, ensuring error-free MSC-1 submission, timely compliance, and ongoing reminders for annual dormant obligations.