What is a Dormant Company?
A Dormant Company is a registered company that has no significant accounting transactions and is declared dormant under Section 455 of the Companies Act, 2013. A company can apply for dormant status if it was formed to hold assets or intellectual property, or intends to commence business in the future but is currently inactive.
Dormant status significantly reduces the compliance burden — companies still maintain their registration and name but are exempted from several regulatory requirements applicable to active companies.
Eligibility Requirements for Dormant Status
| Condition | Requirement |
|---|
| Business Activity | No significant accounting transactions |
| Legal Proceedings | No ongoing inspections, inquiries, or investigations |
| Public Deposits | No outstanding public deposits |
| Loans | No secured/unsecured loans (unless lender consent obtained) |
| Management | No management disputes |
| Tax Dues | All statutory dues cleared |
| Stock Listing | Securities not listed on any stock exchange |
| Shareholder Approval | Special Resolution passed by ≥75% of shareholders by value |
Benefits of Dormant Status
| Regular Active Company | Dormant Company |
|---|
| Annual ROC filings (AOC-4, MGT-7) | Only simplified Form MSC-3 annually |
| Minimum 4 board meetings per year | Only 1 board meeting every 6 months |
| Auditor rotation every 5 years | Exempt from auditor rotation |
| Full Directors' Report | Simplified board report |
| Cash flow statement mandatory | Exempt from cash flow statement |
Limitations
- Dormant status cannot be retained for more than 5 consecutive financial years
- Must apply for active status before the 5-year limit or company may be struck off
- Tax obligations (TDS, GST, ITR) continue even in dormant status
