Dormant, active or closed?
Closing a company through strike-off is final unless it's later revived by the Tribunal. Dormant status keeps the company in existence with its name, PAN and bank relationships, but with a lighter set of filings — useful for a holding vehicle, a company waiting for a project to start, or a business paused for a few years.
Dormant status isn't a way out of past defaults. The company has to be clean on the conditions in the rules before it can apply.
| Situation | Usually the better route |
|---|---|
| Business ended for good, no assets or liabilities | Strike-off |
| Company to be used later, or holding an asset or IP | Dormant status |
| Company already struck off by the ROC but needed | Revival through the Tribunal |
Conditions for applying
- No inspection, inquiry or investigation ordered or pending, and no prosecution pending under any law.
- No public deposits outstanding and no default in repaying deposits or interest.
- No outstanding loans, and no dispute over the management or ownership of the company.
- No outstanding statutory dues, and no unpaid dues to workers.
- Securities not listed on any stock exchange.
The Registrar can also treat a company as inactive if it hasn't filed its financial statements or annual returns for two financial years in a row.
Documents required
- Special resolution, or the written consent of members holding three-fourths of the share value.
- Statement of assets and liabilities, certified by the auditor.
- Declarations from the directors on the conditions in the rules.
- Latest financial statements and annual returns filed.
- Details of the directors who will continue during dormancy.
How we handle it
Check eligibility
Pending filings, loans, deposits, dues and proceedings are checked against the conditions.
Resolution
The board recommends and the members pass the special resolution, or give written consent.
File MSC-1
The application is filed with the statement of assets and liabilities and declarations.
MSC-2 certificate
The Registrar issues the certificate of dormant status.
Annual MSC-3
A return of the dormant company's position, audited by a practising Chartered Accountant, within 30 days of each year-end.
Return to active status
When the company is needed, MSC-4 is filed and normal compliance resumes.
What still applies while dormant
- The minimum number of directors — three for a public company, two for a private company, one for an OPC.
- At least one board meeting in each half of the calendar year, at least 90 days apart.
- The annual MSC-3 return, and any other filings the rules still require.
- Income-tax returns, which the Income-tax Act still expects from every company.
Practical notes from our engagements
- Old filings still pending. Past annual filings and dues usually have to be brought up to date before the application.
- Loans from directors left open. Outstanding loans can stand in the way. We look at how they can be settled or converted first.
- MSC-3 missed. The annual return is short, but missing it undoes the point of dormancy.
How we handle dormant status
We check the company against every condition first, bring pending filings up to date, prepare the resolution, statement and declarations, and file MSC-1. After the certificate, we file MSC-3 each year and the income-tax return, and handle MSC-4 when the company is needed again.
Related services
Frequently asked questions
What is a dormant company?
A company that has been granted dormant status by the Registrar under Section 455 — typically one formed for a future project or to hold an asset or IP, or one with no significant accounting transactions for two financial years.
Which form is used to apply?
Form MSC-1. The Registrar issues the certificate in Form MSC-2.
Does a dormant company still file returns?
Yes — the annual return of a dormant company in Form MSC-3, within 30 days of the end of each financial year, and its income-tax return.
Who audits Form MSC-3?
A Chartered Accountant in practice.
How does a dormant company become active again?
By filing Form MSC-4 with the Registrar, after which normal compliance resumes.
Is dormant status better than closing the company?
If the company will be needed later or holds an asset, usually yes. If it won't be needed, strike-off ends the compliance altogether.