# Dormant Company

## Concept

A Dormant Company is a company that is not actively trading but exists for a specific purpose like:

Holding an asset
Holding intellectual property
A future project

## Who Can Apply?

The following companies may apply to the Registrar for dormant status:

1. A company formed and registered for a future project with no significant accounting transactions, OR

2. A company holding an asset or intellectual property with no significant accounting transactions, OR

3. An inactive company.

## Procedure

Application is made to the Registrar of Companies (ROC) in the prescribed manner.
On approval, the company gets the status of a dormant company.

## Meaning of 'Significant Accounting Transaction'

'Significant accounting transaction' means any transaction OTHER THAN the following four:

#	Permitted Transaction (not significant)
(i)	Payment of fees by the company to the Registrar
(ii)	Payments made to fulfil requirements of this Act or any other law
(iii)	Allotment of shares to fulfil requirements of this Act
(iv)	Payments for maintenance of office and records

## Key Point

So long as a company only engages in the above four permitted transactions, it can retain dormant status. Any other transaction would make it 'active' and disqualify it from dormant status.

Worked example

### Example 1

Example 1: Alpha Pvt Ltd was incorporated in 2024 for a future hydropower project planned for 2028. Till then, the company only pays ROC fees and maintains its registered office. It can apply to the ROC to be classified as a Dormant Company.

### Example 2

Example 2: Beta Ltd holds a patent and does no business activity. It only pays minimum compliance fees, statutory dues and rent for its office. Even though it makes payments, these all fall within the four exempted categories, so it qualifies as dormant.

### Example 3

Example 3: Gamma Pvt Ltd applied for dormant status. In the next year, it sold goods worth ₹2 lakh. This is a 'significant accounting transaction' and would result in loss of dormant status.

⚠️ Common exam mistakes

Thinking 'no transactions at all' is required — actually, the four permitted transactions (ROC fees, statutory compliance payments, share allotment for Act compliance, office maintenance) are allowed.
Confusing 'dormant' with 'struck off' — dormant company is still legally existing and registered; only its status is dormant.
Forgetting that an 'inactive company' can also apply — not just companies formed for future projects.
Assuming any payment makes a company non-dormant — only payments outside the four permitted categories disqualify.

Bare-Act text Section 455 · The Companies Act, 2013 · click to expand

Section 455 – Dormant company: Where a company is formed and registered under this Act 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 make an application to the Registrar in such manner as may be prescribed for obtaining the status of a dormant company. 'Significant accounting transaction' means any transaction other than – (i) payment of fees by a company to the Registrar; (ii) payments made by it to fulfil the requirements of this Act or any other law; (iii) allotment of shares to fulfil the requirements of this Act; and (iv) payments for maintenance of its office and records.

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