Dormant Company Status (Form MSC-1)
If your company has no business right now but you want to keep it alive, Section 455 of the Companies Act, 2013 lets you apply for dormant company status in Form MSC-1. A dormant company keeps a lighter routine built around an annual return in MSC-3, and it can stay dormant for up to five years. We check eligibility, prepare the resolutions and file on the MCA V3 portal.
What it is
A dormant company is a registered company that the Registrar of Companies has formally recorded as inactive. It keeps its name, its CIN and its assets, but it does not trade. In return for lighter filing, it stays inactive until it applies to become active again.
The law is Section 455 of the Companies Act, 2013 and Rules 3 to 8 of the Companies (Miscellaneous) Rules, 2014. The company applies in Form MSC-1. The ROC issues a certificate in Form MSC-2 and enters the company in its register of dormant companies. Each year the company files a return in Form MSC-3. When it is ready to restart, it applies in Form MSC-4 and gets an MSC-5 certificate.
Who it applies to
You formed it for a future project
Section 455 allows a company formed for a future project, with no significant accounting transaction yet, to apply. Say you incorporated a company in Faridabad to build a warehouse, and the land approvals are still a year away.
It only holds an asset or IP
A company that exists only to hold a property, a trademark or other intellectual property, without trading, can seek dormant status.
It has stopped trading
An inactive company has done no business, or had no significant accounting transaction, in the last two financial years. Not filing financial statements and annual returns for two years also counts. Think of a Faridabad trading company that stopped operations in 2023 and has had no sales since.
Why it matters
Keep the company on a lighter routine
A dormant company’s yearly work centres on the MSC-3 return, two board meetings and keeping its minimum directors.
Stay off the strike-off list
Under Section 248(1)(c), the ROC can strike off a company that has done no business for two financial years and has not applied for dormant status. MSC-1 is that application.
Restart without registering afresh
The name, CIN and incorporation date stay intact. When the project starts, an MSC-4 application brings the company back, without registering a new one.
Conditions for applying
Rule 3 of the Companies (Miscellaneous) Rules, 2014 sets the conditions. The company can apply in MSC-1 only if:
- no inspection, inquiry or investigation has been ordered or taken up against it
- no prosecution has been started and is pending against it
- it has no public deposits outstanding and no default in repaying them
- it has no outstanding secured loan; an unsecured loan needs the lender’s consent
- it has no outstanding statutory taxes, dues or duties
- it has not defaulted in paying workmen’s dues
- its securities are not listed on any stock exchange
Here is the catch: these conditions are tested on the company as it stands today. A company that stopped trading but still owes a GST demand or a bank term loan has to clear it before applying.
The shareholders must approve the application by special resolution, or the company must give notice to all shareholders and get consent from holders of at least three-fourths of the share value.
A significant accounting transaction means anything other than payment of ROC fees, payments needed to meet legal requirements, allotment of shares to meet the Act’s requirements, and payments to maintain the office and records. So paying the auditor or renting a registered office does not break dormancy. Buying or selling stock does.
Documents required
Resolutions
- Certified board resolution authorising the application
- Certified special resolution, or the three-fourths consent of shareholders
Financial papers
- Statement of affairs certified by a chartered accountant or the company’s auditor
- Auditor’s certificate
- Latest financial statements and annual return, if filed
Other confirmations
- Lender’s consent, if an unsecured loan is outstanding
- Certificate that there is no dispute in management or ownership
- Valid DSC of a director
How it works
Check eligibility against Rule 3
We go through the company’s loans, tax dues, filings and pending notices. Open GST or TDS dues come first. One unpaid statutory due blocks the application.
Bring overdue filings up to date
The ROC looks at the company’s filing history. We complete pending annual ROC filings and director KYC so that the application is clean.
Pass the resolutions and get the certificates
We draft the board resolution and the special resolution, or the shareholder consent letters, and get the statement of affairs and auditor’s certificate ready.
File MSC-1 on the MCA V3 portal
We file the application with the attachments and track it until the ROC issues the MSC-2 certificate.
Keep up the dormant routine
In practice, this is a small yearly checklist. We file MSC-3 by 30 April, remind you about the two board meetings and watch the five-year limit.
Timelines
MSC-3 within 30 days of year-end
The return of a dormant company is due within 30 days from the end of each financial year, so by 30 April, with the annual fee.
Board meeting every half-year
Under Section 173(5), a dormant company meets the board-meeting rule with at least one meeting in each half of the calendar year, with a gap of at least 90 days between the two.
Five consecutive years at most
Under Rule 8, if a company stays dormant for five consecutive years, the ROC moves to strike it off. Plan to reactivate or close before then.
Dormant status vs closing the company
| Dormant status (Section 455) | Strike-off (Section 248) | |
|---|---|---|
| Company continues to exist | Yes, with the same name and CIN | No, the name is removed from the register |
| Form | MSC-1, then MSC-3 every year | STK-2, once |
| Assets | Can keep holding property or IP | Must be dealt with before closure |
| Coming back | MSC-4 application | Only through revival under Section 252 |
| Best for | A pause with a definite plan to restart | No plan to restart |
If you have no plans for the company, closing the private limited company is usually cheaper over time than keeping it dormant.
What happens if you miss it
The ROC can strike the company off
Section 455(6) lets the ROC strike off a dormant company that fails to meet its requirements. An inactive company that never applies for dormant status faces strike-off under Section 248.
Directors’ DINs get deactivated
Dormancy does not pause the directors’ own filings. Under the new three-year cycle, a missed DIR-3 KYC deactivates the DIN, and reactivation costs ₹5,000.
A missed MSC-3 puts the status at risk
The annual return is the condition for staying dormant. Skip it and the company has failed the Section 455 requirements, which is the ground for strike-off.
Frequently asked questions
What is a dormant company under the Companies Act?
A dormant company is one the ROC has recorded as inactive under Section 455 of the Companies Act, 2013. It can be a company formed for a future project or to hold an asset or intellectual property, or an inactive company with no business or significant accounting transaction in the last two financial years. It applies in Form MSC-1 and receives an MSC-2 certificate. The company stays registered and can restart later.
How long can a company remain dormant?
Up to five consecutive years. Rule 8 of the Companies (Miscellaneous) Rules, 2014 says that if a company remains dormant for five consecutive years, the ROC will start strike-off proceedings. So use the time to decide: apply in MSC-4 to become active, or close the company properly. We diarise the five-year date the day your MSC-2 certificate arrives.
What compliance does a dormant company still have?
Fewer, but not zero. It files Form MSC-3 within 30 days of each financial year-end, with the annual fee. It holds at least one board meeting in each half of the calendar year, at least 90 days apart, under Section 173(5). It keeps the minimum directors: three for a public company, two for a private company and one for an OPC. It also files an income tax return every year. We run this routine for you.
Can a company with a loan apply for dormant status?
Only with an unsecured loan and the lender’s consent. Rule 3 bars the application if the company has an outstanding secured loan, outstanding public deposits, outstanding statutory dues or unpaid workmen’s dues. An unsecured loan, say from a director, is fine if the lender consents in writing. We check the balance sheet before drafting anything, so you know where you stand on day one.
What is a significant accounting transaction?
Any transaction other than four permitted kinds: payment of fees to the ROC, payments to meet legal requirements, allotment of shares to meet the Act’s requirements, and payments to maintain the office and records. Paying your auditor or your registered office rent is fine. Buying stock, raising invoices or taking new loans breaks dormancy. If you are unsure about one entry, ask us before you book it.
How does a dormant company become active again?
It applies to the ROC in Form MSC-4 with the required returns and fee, and the ROC issues a certificate in Form MSC-5. After that, the company follows the normal compliance of an active company again, including board meetings and annual filings. Planning the restart a few weeks ahead keeps the switch smooth.
Is dormant status the same as closing the company?
No. A dormant company stays on the register with its name, CIN and assets, and files MSC-3 every year. A strike-off under Section 248 removes the company altogether, and bringing it back needs revival under Section 252. Choose dormant status only when you have a real plan to restart within five years. Otherwise closure is usually the cleaner option.
What is the annual fee for a dormant company?
It depends on the company type and authorised capital. A small company or OPC pays ₹1,000 a year with authorised capital up to ₹25 lakh, and ₹2,500 for ₹25–50 lakh. Other companies pay ₹2,000 up to ₹25 lakh and ₹5,000 for ₹25–50 lakh. The fee goes with Form MSC-3. That is far below the cost of running full compliance.
Can the ROC mark a company dormant on its own?
Yes. If a company has not filed its financial statements or annual returns for two financial years in a row, Section 455 allows the ROC to send it a notice and enter it in the register of dormant companies. Filing on time, or applying in MSC-1 yourself, keeps you in control.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
A dormant company pays an annual fee with MSC-3:
| Authorised capital | Small company or OPC | Other companies |
|---|---|---|
| Up to ₹25 lakh | ₹1,000 | ₹2,000 |
| ₹25 lakh to ₹50 lakh | ₹2,500 | ₹5,000 |
Ready to begin?
Tell us when your company last traded and what it owes, and we will tell you within a day whether MSC-1 is open to you.