Section 455: Dormant company
This section is for the process and rules of a company becoming and remaining a dormant company, which has limited or no business activity.
The section, clause by clause
What the section says
In plain terms
(1)Where a company is formed and registered under this Act for a future project or 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.
A company that has no significant accounting transactions and is formed for a future project or to hold an asset can apply to the Registrar to be classified as a dormant company, and an inactive company, which is one that has not been carrying on business or made significant accounting transactions for the last 2 financial years, can also make this application.
explanationExplanation.—For the purposes of this section,—
(1)(i)“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;
(1)(ii)“significant accounting transaction” means any transaction other than—
(1)(a)payment of fees by a company to the Registrar;
(1)(b)payments made by it to fulfil the requirements of this Act or any other law;
(1)(c)allotment of shares to fulfil the requirements of this Act; and
(1)(d)payments for maintenance of its office and records.
(2)The Registrar on consideration of the application shall allow the status of a dormant company to the applicant and issue a certificate in such form as may be prescribed to that effect.
The Registrar will consider the application and allow the company to have dormant status, issuing a certificate to confirm this.
(3)The Registrar shall maintain a register of dormant companies in such form as maybe prescribed.
The Registrar must keep a register of all dormant companies in a prescribed form.
(4)In case of a company which has not filed financial statements or annual returns for two financial years consecutively, the Registrar shall issue a notice to that company and enter the name of such company in the register maintained for dormant companies.
If a company has not filed financial statements or annual returns for 2 consecutive financial years, the Registrar will send a notice to the company and add its name to the dormant companies register.
(5)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 must have a minimum number of directors, file certain documents, and pay an annual fee to keep its dormant status, and it can become active again by applying and paying a fee.
(6)The Registrar shall strike off the name of a dormant company from the register of dormant companies, which has failed to comply with the requirements of this section.
The Registrar will remove a dormant company from the register if it fails to comply with the requirements for dormant companies.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 3. Ins. by Act 29 of 2020, s. 65 (w.e.f. 22-1-2021).
- 1. Subs. by Act 22 of 2019, s. 42, for “such company and the officer who is in default” (w.e.f. 2-11-2018).
- 2. Subs. by s. 42, ibid., for “does not pay the penalty imposed by the adjudicating officer or the Regional Director” (w.e.f. 2-11- 2018).
- 3. The words “Where an officer of a company or any other person” omitted by s. 42, ibid., (w.e.f. 2-11-2018).
- 4. The words “does not pay the penalty” omitted by s. 42, ibid. (w.e.f.. 2-11-2018).
- 5. Ins. by s. 43, ibid. (w.e.f. 2-11-2018).
- 1. The proviso omitted by Act 1 of 2018, s. 93 (w.e.f. 9-2-2018).
Referred to by
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.