What is Dormant Status Filing?

Dormant Status Filing refers to the process by which a company officially declares itself as dormant with the Registrar of Companies (ROC). A dormant company is one that is not engaged in any business activities or transactions, but it still exists in the corporate records.

Under the Companies Act, 2013, a company can opt for dormant status to suspend operations temporarily while ensuring it stays legally registered and protected. Dormant status allows a company to preserve its name, corporate structure, and identity without having to wind up completely.

Why Do Companies Choose Dormant Status?

There are several reasons a company might choose to file for dormant status:

1. Business Suspension: A company may temporarily halt its business activities for strategic reasons, while still keeping its corporate identity intact for future use.
2. Avoiding Strike-Off: When a company hasn’t been active for a while, it may risk being struck off by the Registrar of Companies. Opting for dormant status helps prevent this.
3. Cost-Effective Option: Instead of undergoing the costly process of winding up, a company may choose dormant status to keep its operations on pause.
4. Preserving Future Plans: If a company intends to restart operations in the future, maintaining dormant status ensures the legal structure remains available for a smooth transition.

Who Can Opt for Dormant Status?

Certain types of companies can file for dormant status:

1. Inactive Companies: Companies that have not been carrying on any business transactions but wish to retain their legal entity.
2. Non-Operational Companies: Businesses that are temporarily not operating but may resume activity at a later time.
3. Holding Companies: A holding company without active business operations can also apply for dormant status to protect its structure.
4. Companies with Future Intentions: Companies planning to resume operations in the future or under certain conditions may prefer dormant status.

Steps to File for Dormant Status

1. Pass a Board Resolution

The company must first pass a Board Resolution that approves the decision to declare the company dormant. The resolution should state that the company has not been involved in any business activities and the partners or shareholders agree with this status.

2. File Form MSC-1 with ROC

The next step is to file Form MSC-1 with the Registrar of Companies (ROC). This form serves as a declaration to the ROC that the company intends to be declared dormant.

Form MSC-1 requires:

• Company’s Name and Corporate Identity Number (CIN).
• A Board Resolution confirming the decision to declare the company dormant.
• A statement confirming that the company has not carried on any operations.

3. Annual Filing Requirements

Once a company is declared dormant, it must file an annual declaration in Form AOC-4 and MGT-7, stating that it has remained dormant during the year and confirming it hasn't conducted any business transactions.

4. Filing Form MSC-3 to Maintain Dormant Status

To maintain dormant status each year, the company must file Form MSC-3. If the company resumes business operations, it must file this form to indicate that it is no longer dormant.

Documents Required for Dormant Status Filing

• Board Resolution: A certified copy of the board resolution passed for declaring the company dormant.
• Form MSC-1: The form that officially notifies the ROC of the dormant status.
• Financial Statements: These must confirm that no operations were carried out by the company.
• Digital Signature: The signature of the designated partner or company’s authorized signatory is required.