MSC-1: Dormant Company Status — When & How to Apply

What is Dormant Company status?

Section 455 of the Companies Act, 2013 introduces 'Dormant Company' status — a halfway house between an active company and a struck-off company. Suitable for:

• Companies formed to hold an asset or IP without active business
• Companies temporarily paused, intending to revive
• Companies with no significant transactions for 2+ years
• SPVs (Special Purpose Vehicles) waiting for projects to start

A dormant company gets significantly reduced compliance obligations — making it cheaper to maintain than an active company, without having to fully strike off.

Eligibility for dormant status

A company can apply for dormant status if:

1. It has been inactive (no significant transactions) OR was formed for future projects
2. It is NOT formed for any non-compliance purpose (e.g., shell company for tax evasion)
3. It is up-to-date on all MCA filings (AOC-4, MGT-7, etc.)
4. It has no outstanding loans, taxes, statutory dues
5. No application for compounding pending
6. Not under investigation/prosecution

'Significant transactions' exclude: bank charges, payment of compliance fees, allotment of subscriber shares, statutory expenses.

Reduced compliance for dormant companies

Dormant status provides relief from:

• Annual return filing — Replace MGT-7 with simpler MSC-3 (annual statement)
• Board meetings — Reduced to minimum 1 per half year (instead of 4 per year)
• Annual general meeting — Not required
• Audit — Statutory audit still required (Section 138/139), but simpler with no operations
• Director KYC — DIR-3 KYC still mandatory annually

Estimated compliance cost reduction: ₹15,000-30,000 per year vs an active Pvt Ltd.

Application process — MSC-1

1. Ensure all MCA filings are up to date
2. Pass Board resolution to apply for dormant status
3. Pass special resolution at General Meeting (or get consent from 3/4 in nominal value of paid-up capital)
4. Fill Form MSC-1 with:
   • Reasons for applying dormant
   • Declaration of no significant transactions
   • Statement of accounts (no operations)
   • Declaration of no statutory dues
5. Attach: Special resolution, board resolution, latest audited financials, declaration by directors
6. Sign with DSC + CA/CS/CMA certification
7. Pay fee (₹2,000)
8. Submit; RoC processes in 4-6 weeks
9. If approved, certificate of dormant status issued

Returning to active — MSC-4

To revive dormant company to active status:

1. Pass Board resolution intending to recommence business
2. File Form MSC-4 within 30 days
3. Attach: New business plan, board resolution, fresh statement of accounts
4. Pay fee (₹500)
5. RoC reviews — if approved, company is reverted to active
6. Resume full compliance from the date of reversal

Maximum dormancy: 5 consecutive years. After this, RoC may strike off if not reactivated. Plan accordingly.