Close Private Limited Company

A defaulting Company is a company which does not file the annual returns and/or annual financials for any financial year(s).Such a company can apply for FTE provided it fulfils other conditions.

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.

any transaction other than— A) payment of fees by a company to the Registrar; B) payments made by it to fulfil the requirements of this Act or any other law; C) allotment of shares to fulfil the requirements of this Act; and D) payments for maintenance of its office and records.

There is lesser compliance burden for a dormant company which reduces the costs of maintaining such a company.

Dormant Companies’ are exempted from the following: A) To include cash flow statements in their financial statements. B) From holding board meeting in each quarter. Dormant companies are required to hold board meeting in each half of the calender year with a gap of atleast 90 days. Therefore, dormant companies are required to hold only two board meetings mandatorily during the year. C) The provisions of the Act in relation to the rotation of auditors shall not apply to dormant companies.

Process for obtaining status of dormant company is: A) Call a Board Meeting for fixing date, time of EGM. B) Issue Notice of General Meeting C) Engage an Auditor/ Chartered Accountant to issue certificate. D) Hold Extra Ordinary General Meeting E) Pass Special Resolution. F) Authorize director to make application for Dormant with ROC. G) File E-form MGT-14 with ROC for filing special resolution. H) After filling of form MGT-14, File Form MCS-1 with the registrar.