Thursday, 28 August 2014

Dormant Companies

The Companies (Miscellaneous) Rules 2014, for the purposes of sub-section (1) of section 455, a company may make an application in Form MSC-1 along with such fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 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 or after issuing a notice to all the shareholders of the company for this purpose and obtaining consent of at least 3/4th shareholders (in value). [Rule 3 of the Companies (Miscellaneous) Rules 2014]
A company shall be eligible to apply under this rule only, if-
  • no inspection, inquiry or investigation has been ordered or taken up or carried out against the company;
  • no prosecution has been initiated and pending against the company under any law;
  • the company is neither having any public deposits which are outstanding nor the company is in default in payment thereof or interest thereon;
  • the company is not having any outstanding loan, whether secured or unsecured. If there is any outstanding unsecured loan, the company may apply under this rule after obtaining concurrence of the lender and enclosing the same with Form MSC-1;
  • there is no dispute in the management or ownership of the company and a certificate in this regard is enclosed with Form MSC-1;
  • the company does not have any outstanding statutory taxes, dues, duties etc. payable to the Central Government or any State Government or local authorities etc.;
  • the company has not defaulted in the payment of workmen’s dues;
  • the securities of the company are not listed on any stock exchange within or outside India. [Proviso to Rule 3 of the Companies (Miscellaneous) Rules 2014]
The Registrar shall, after considering the application filed in Form MSC – 1, issue a certificate in Form MSC – 2 allowing the status of a Dormant Company to the applicant. [Rule 4 of the Companies (Miscellaneous) Rules 2014]
The Register maintained under the portal maintained by the Ministry of Corporate Affairs on its web-site http://www.mca.gov.in or any other website notified by the Central Government, shall be the register for dormant companies. [Rule 5 of the Companies (Miscellaneous) Rules 2014]
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. [Rule 6 of the Companies (Miscellaneous) Rules 2014]
The provisions of the Act in relation to the rotation of auditors shall not apply on dormant companies. [Proviso to Rule 6 of the Companies (Miscellaneous) Rules 2014]
A dormant company shall file a “Return of Dormant Company” annually, interalia, indicating financial position duly audited by a chartered accountant in practice in Form MSC – 3 along with such annual fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 within a period of thirty days from the end of each financial year. [Rule 7 of the Companies (Miscellaneous) Rules 2014]
The company shall continue to file the return or returns of allotment and change in directors in the manner and within the time specified in the Act, whenever the company allots any security to any person or there is any change in the directors of the company. [Proviso to Rule 7 of the Companies (Miscellaneous) Rules 2014]
An application, under sub-section (5) of section 455, for obtaining the status of an active company shall be made in Form MSC – 4 along with fees as provided in the Companies (Registration Offices and Fees) Rules, 2014 and shall be accompanied by a return in Form MSC – 3 in respect of the financial year in which the application for obtaining the status of an active company is being filed. [Rule 8(1) of the Companies (Miscellaneous) Rules 2014]
The Registrar shall initiate the process of striking off the name of the company if the company remains as a dormant company for a period of consecutive five years. [Proviso to Rule 8(1) of the Companies (Miscellaneous) Rules 2014]
The Registrar shall, after considering the application filed under sub-rule (1), issue a certificate in Form MSC – 5 allowing the status of an active company to the applicant. [Rule 8(2) of the Companies (Miscellaneous) Rules 2014]
Where a dormant company does or omits to do any act mentioned in the Grounds of application in Form MSC – 1 submitted to Registrar for obtaining the status of dormant company, affecting its status of dormant company, the directors shall within seven days from such event, file an application, under sub-rule (1) of this rule, for obtaining the status of an active company. [Rule 8(3) of the Companies (Miscellaneous) Rules 2014]
Where the Registrar has reasonable cause to believe that any company registered as ‘dormant company’ under his jurisdiction has been functioning in any manner, directly or indirectly, he may initiate the proceedings for enquiry under section 206 of the Act and if, after giving a reasonable opportunity of being heard to the company in this regard, it is found that the company has actually been functioning, the Registrar may remove the name of such company from register of dormant companies and treat it as an active company. [Rule 8(4) of the Companies (Miscellaneous) Rules 2014]

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