Get Dormant Status Filing Done in India with Legal Support

Introduction

Dormant Status Filing is crucial for companies in India that are temporarily inactive. Many business owners may not know how to navigate the process or understand its benefits. Are you a startup founder, an LLP partner, or part of a company’s compliance team? Understanding dormant status can save you time and money. A recent study shows that over 60% of eligible small companies in India do not apply for dormant status due to lack of awareness and procedural complexities.

Many companies don’t know when or why to file for dormant status, and wrong filing can lead to MCA rejection or penalties. Plus, getting help with documentation and board resolutions can be tough. Business owners often delay filing due to process confusion, and MCA portal issues can frustrate companies trying to comply.

If you’re feeling lost with dormant status filing, you’re not alone. Prospect Legal is here to help you comply with regulations stress-free. Imagine Sarthak LLP in Jabalpur wanting to convert to dormant status, but feeling overwhelmed. We can help simplify the process.

Ready to simplify your compliance journey? Contact Prospect Legal today!

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Understanding Dormant Status for Companies in India

Inactive company status, also known as dormant status, under the Companies Act, 2013 means a company that isn’t carrying on any business or operation, or has not made any significant accounting transaction during the last two financial years; or has applied to become a dormant company. Significant accounting transaction excludes payment of fees by a company to the Registrar; payments made to fulfill the requirements of the Companies Act or any other law; allotment of shares to fulfill the requirements of the Companies Act; and payments for maintenance of its office and records.

What are the benefits of obtaining inactive company status?

• Reduced compliance requirements ease the burden on your business.
• Cost savings result from fewer mandatory filings and audits.
• Preservation of the company’s name and legal existence ensures you can reactivate when ready.

However, there are also disadvantages:

• Restrictions on business activities mean you can’t actively trade or generate income.
• Annual compliance still requires filing Form MSC-3, adding to the administrative load.

For instance, Mr. Sinha from Bhopal realized his private limited company wasn’t operational due to market conditions. Filing for dormant status helped him avoid unnecessary compliance costs while he planned his next move. Prospect Legal can help you assess whether dormant status is right for your company.

Ready to explore if dormant status is right for you? Contact Prospect Legal today!

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📧 Email Us: prospectlegalbpl@gmail.com

Eligibility Criteria for Dormant Status

To be eligible for dormant status filing in India, a company must meet certain conditions:

• The company must not be carrying on any business or operation.
• There should be no significant accounting transaction during the last two financial years.
• There should be no inquiry, inspection, or investigation pending against the company.
• The company should not have any outstanding public deposits or dues.
• The company must not have any secured or unsecured loans.
• There should be no disputes in the management or ownership of the company.

Here’s when a company might NOT be eligible:

• Active business operations: If you’re still trading, you can’t apply.
• Ongoing investigations: If the MCA is investigating you, you’re ineligible.
• Non-compliance issues: Unresolved regulatory issues disqualify you.

Mrs. Patel from Indore found out her company was ineligible due to a pending investigation. Prospect Legal helped her resolve the issue so she could later apply for dormant status.

Think you’re eligible? Let Prospect Legal confirm your eligibility and guide you through the next steps!

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Step-by-Step Guide to Filing for Dormant Status in India

Here’s a simplified guide to file dormant status in India:

1. Prepare Necessary Documents: This includes the application form (MSC-1), board resolution, auditor’s statement, and latest financial statements.
2. Pass a Board Resolution: Get approval from your board of directors to apply for dormant status.
3. Submit the Application: File Form MSC-1 through the MCA portal with all required attachments.
4. Obtain Dormancy Help: Contact experts like Prospect Legal for assistance.

Why is accuracy important? Because incorrect information can lead to rejection, causing delays and potential penalties. Amit Ji, a CA from Gwalior, contacted Prospect Legal when his client’s initial application was rejected. We helped correct the errors and resubmit successfully.

Looking for dormancy help? Prospect Legal makes filing for dormant status straightforward!

📞 Call Us Today: 7000-12-7225
📧 Email Us: prospectlegalbpl@gmail.com

Potentially Applicable Laws/Key Governing Laws

Companies Act, 2013 – Section 455

Allows companies to apply for dormant status

Companies (Miscellaneous) Rules, 2014 – Rule 3 to 8

Specifies filing forms MSC-1 and MSC-3 for dormant status

Form MSC-1: Application for Dormant Status

Form MSC-1 is critical for applying for dormant status. It requires detailed information about the company, reasons for seeking dormant status, and various declarations.

Here’s how to fill it out accurately:

• Provide accurate CIN, registered office address, and email ID.
• State clearly the reasons for seeking dormant status.
• Attach all required documents, including board resolution, auditor’s certificate, and financial statements.
• Ensure all directors have valid DINs and DSCs.

Common errors to avoid:

• Incorrect CIN or address details.
• Missing mandatory attachments.
• Inconsistent information across documents.

Understanding ROC dormant status and accurately completing Form MSC-1 can be challenging. Prospect Legal can help you navigate each section and avoid common pitfalls. Jai Corporate Services in MP Nagar almost missed critical details on their form, but Prospect Legal ensured a smooth submission.

Need help with Form MSC-1? Contact Prospect Legal for expert guidance!

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Maintaining Dormant Status and Annual Compliance

Even with dormant status, some compliance is required. The key is filing the annual return (Form MSC-3).

Here’s what you need to know:

• File Form MSC-3 annually to confirm the company’s dormant status.
• Hold at least one board meeting per year.
• Comply with any other applicable regulations under the Companies Act.

Failing to meet these requirements can lead to:

• Penalties for late filing or non-compliance.
• Revocation of dormant status, forcing you back into full compliance.

Rajeev Ji from Gwalior almost forgot to file his MSC-3. Prospect Legal sent timely reminders and helped him file before the deadline, avoiding penalties.

Let Prospect Legal handle your dormant company compliance – contact us today!

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Reactivation of Dormant Company

Ready to bring your dormant company back to life? Here’s the procedure:

• Pass a board resolution to resume business activities.
• File Form MSC-4 with the MCA, along with necessary documents and fees.
• Obtain any required regulatory approvals.

Implications of resuming business:

• Full compliance with the Companies Act, including regular filings and audits.
• Potential tax implications based on resumed business activities.

Shalini from Indore reactivated her company after securing new funding. Prospect Legal guided her through the reactivation process and ensured she met all compliance requirements.

Ready to reactivate your company? Prospect Legal can make it seamless – contact us now!

📞 Call Us Today: 7000-12-7225
📧 Email Us: prospectlegalbpl@gmail.com

Frequently Asked Questions (FAQ)

• Q: What are the benefits of obtaining dormant status for my company in India?
  • A: Dormant status reduces compliance requirements and costs while preserving the company’s legal existence.
• Q: How long can a company remain in dormant status in India?
  • A: A company can remain in dormant status for a maximum of five years.
• Q: What is Form MSC-3 and when do I need to file it?
  • A: Form MSC-3 is the annual return for dormant companies, and it must be filed every year to maintain dormant status.
• Q: What happens if my application for dormant status is rejected by the MCA?
  • A: You will need to rectify the issues and re-apply, or maintain active company compliance.
• Q: Can a dormant company still hold assets or liabilities?
  • A: Yes, a dormant company can hold assets and liabilities but cannot engage in active business transactions.

Still have questions? Prospect Legal has answers and solutions – contact us today!

📞 Call Us Today: 7000-12-7225
📧 Email Us: prospectlegalbpl@gmail.com