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Dormant Company
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This is a new initiative of Ministry of Corporate Affairs to introduce the concept of Dormant Companies, whereby Companies which are not carrying on any significant accounting transaction for a period of two years can apply to Registrar of Companies for getting declared itself as Dormant Companies. In today’s economic environment, a lot of Companies are formed for the purpose of holding any assets particularly real assets or any IPR or for a future project and such Company just keeps on complying with the laws even if no actual business is being done or transacted.
Salient Features of new Act
- Where a Company is formed and registered under the new law 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 now make an application to the Registrar for obtaining the status of a ‘Dormant Company’.
- The new Act also includes a definition of an “Inactive Company” defined as meaning a Company which has not been carrying on any business or operation, or has not made any significant accounting transaction during the last 2 financial years, or has not filed financial statements and annual returns during the last 2 financial years
- The definition of “Significant Accounting Transaction” meaning any transaction other than that of (a) payment of fees by a Company to the Registrar, (b) payments made by it to fulfill the requirements of this Act or any other law, (c) allotment of shares to fulfill the requirements of this Act and (d) payments for maintenance of its office and records.
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