Udyog Suvidha Kendra
Stay Compliant While Inactive

Dormant Company Status
Filing

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.

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Company Status

What is a Dormant Company?

Dormant Company status is a provision under Section 455 of 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, while reducing compliance burden and avoiding penalties.

Dormant Company Status Overview

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 Apply?

Dormant status is suitable for:

  • Companies formed for future projects or investments.
  • Startups not yet operational but intending to commence later.
  • Businesses holding assets, trademarks, or intellectual property.
  • Companies undergoing restructuring or strategic pause.
  • Firms temporarily halting operations to reduce compliance costs.

Applying for dormant status helps 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

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.

Requirement 1: 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.

Requirement 2: 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

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

Requirement 3: 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:

Director Approval

Directors must provide formal approval

ROC Filing

Resolution filed with ROC using Form MGT-14

Shareholder Consent

At least 3/4th in value of shareholders

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

Requirement 4: 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

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

Requirement 5: 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.

No Legal Action

Free from litigation

No Defaults

All dues cleared

Critical: Any pending investigation or regulatory action must be resolved before the company can apply for dormant status.

Required Documents

Essential documents for filing Form MSC-1.

Board Resolution

Approving the decision for dormant status.

Shareholders’ Special Resolution (MGT-14)

SFiled with ROC, authorizing the status change.

Statement of Affairs (Form MSC-1)

A declaration of the company’s current financial position.

Certificate of No Debt or Liabilities

Confirmation that the company has cleared all outstanding dues.

Auditor’s Certificate

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

Director Consents

Approval from all directors for dormancy filing.

PAN Card of the Company

Identity proof of the company for ROC verification.

Latest Financial Statements

Audited financials showing no major business activity.

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

Ensures all previous compliance is up to date.

Proof of Registered Office

Address proof where the company is registered.

Application Process

Step-by-step guide to obtaining Dormant Company Status.

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.

✓

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.

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.

Deadline: Within 30 days of financial year end

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.

Requirement: Min 2 (Pvt Ltd) or 3 (Public) directors

Annual Compliance Overview
Status
100% Compliant
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.

Prohibited: Commercial transactions, invoicing, investments

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.

Required: Simplified financial statements & annual returns

Procedure to Reactivate a Dormant Company

When a dormant company is ready to resume business operations, it must follow a formal reactivation process with the ROC.

STEP 1

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.

STEP 2

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.

STEP 3

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.

STEP 4

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.

FINAL STEP

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.

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.

Eligibility Check Board Resolutions 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.

Form MSC-1 Form MGT-14 Digital Signing
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.

MSC-3 Filing Reminders Monitoring

Frequently Asked Questions

Dormant Status Filing in Different States

Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Goa Gujarat Haryana Himachal Pradesh Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Odisha Punjab Rajasthan Sikkim Tamil Nadu Telangana Tripura Uttar Pradesh Uttarakhand West Bengal Delhi Chandigarh Ladakh Lakshadweep Puducherry Jammu & Kashmir Andaman & Nicobar Dadra & Nagar Haveli

Dormant Status Filing in Major Cities

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