DORMANT COMPANY – A NEW ASSET SHIELDING CONCEPT UNDER COMPANIES ACT 2013

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A Dormant Company offers excellent advantage to promoters who wants t to hold an asset or intellectual property under the corporate shield for its usage at a later stage . For instant , if a promoter wants to buy lands now for its future project at a comparatively lesser price , he may do the same through dormant company so that he use the land for its project latter. Thus , dormant company status is a new phenomenon in the Companies Act 2013 and is an excellent tool for keeping assets in the company for its future usage. A dormant company may be either a public company or a private company or a one person company.�

According to Section 455 of the Companies Act 2013, where a company is formed and registered under this Act for a future projector 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.�According to section 455 of Companies Act 2013, “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;��

According to section 455 of Companies Act 2013,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.�In case of a company which has not filed financial statements or annual returns for two financial years consecutively, the Registrar of companies shall issue a

notice , suo motto , 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.��

A Dormant Company need not enclose cash flow statements  in  its annual accounts.�

A Dormant  Company  is  required  to  convene at  least  one meeting  of  the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than ninety days:�As per section 248 of the Companies Act 2013, the Registrar of Companies may remove the name of a company from the register of companies  , if a company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455.��

As per draft  rules  ,  for  the purposes of  sub‐section  (1) of  section 455, a company may make an application in Form No. 29.2 along with such fee as provided  in  Annexure  ‘B’  to  the  Registrar  for  obtaining  the  status  of  a Dormant Company in accordance with the provisions of section 455 after passing  a  special  resolution  to  this  effect  in  the  general meeting  of  the company.�

The  Registrar  shall,  after  considering  the  application  filed  in  Form  No. 29.2, issue a certificate in Form No. 29.3 allowing the status of a Dormant Company to the applicant.�

For  the  purposes  of  sub‐section  (5)  of  section  455,  a  dormant  company shall  have  a  minimum  number  of  three  directors  in  case  of  a  public company, two directors  in case of a private company and one director  in case of a One Person Company:�

Thus  ,  one  person  company  (OPC)  can  also  be  registered  as  a  dormant company under section 455.�

For  the  purposes  of  sub‐section  (5)  of  section  455,  a  dormant  company shall file a declaration annually in Form No. 29.4 along with such annual fee as provided  in Annexure  ‘B’ within  thirty days  from  the  end  of  each financial year.�

Application under sub‐section (5) of section 455 for obtaining the status of an active company from that of dormant company shall be made in Form No. 29.5 along with such fee as may be provided in Annexure ‘B’ and shall be accompanied by a  return  in Form No. 29.4  in  respect of  the  financial year  in  which  the  application  for  obtaining  the  status  of  an  active company is being filed. �