Company Law and Practice · Dormant Company

Obligations and Compliance of a Dormant Company

Updated 11 October 2026 · Fact-checked

A company formed for a future project or to hold an asset or intellectual property, or an inactive company, may apply under Section 455(1). It becomes a dormant company only when the Registrar allows the status and issues a certificate. To keep it, it needs the prescribed directors, documents and annual fee.

Understand Obligations and Compliance of a Dormant Company

A company formed for a future project, or to hold an asset or intellectual property, with no significant accounting transaction, may apply to the Registrar for dormant status under Section 455(1). So may an inactive company. It becomes a dormant company only when the Registrar allows the status and issues a certificate (Section 455(2)). Dormant status lets such a company stay on the register with lighter compliance, instead of being struck off.

Dormant status is not a holiday from the law. Section 455(5) says a dormant company must have the prescribed minimum number of directors, file the prescribed documents and pay the prescribed annual fee to the Registrar to retain its status. The numbers, forms and fees sit in the rules, not in the section.

Under the rules, the minimum directors follow the normal company type: three for a public company, two for a private company and one for a One Person Company. The yearly filing is the return in Form MSC-3, filed with the financial statements, within thirty days of the end of the financial year, along with the fee. Check the exact timeline and fee in your study material.

Board meetings are relaxed, not removed. Under Section 173(5), read with the rules, a dormant company is treated as complying if it holds at least one Board meeting in each half of the calendar year, with a gap of at least ninety days between the two meetings. This duty comes from Section 173, not Section 455. A default is dealt with under Section 173 and its own consequences. It is not a direct ground for strike-off under Section 455(6). Members and records must also be kept in order.

If the company does not comply with the requirements of Section 455 (directors, documents, fee), Section 455(6) lets the Registrar strike off its name from the register of dormant companies. The company can also return to active status by an application with the prescribed documents and fee (Section 455(5)). Compare this with Section 92, where an ordinary company must file its annual return within sixty days of the AGM.

Key rules to remember

Retaining dormant status: Minimum directors + prescribed documents + annual fee = status retained (Section 455(5)); All three are 'as may be prescribed'. The section sets the duty; the rules give numbers.
Minimum directors (rules): Public company: 3; Private company: 2; One Person Company: 1; Same as the normal minimum for each company type.
Annual return of dormant company: Form MSC-3, with financial statements and fee, within 30 days of financial year end; Statements are to be audited as the rules require. Confirm details in the study material.
Board meetings (Section 173(5)): At least 1 meeting in each half of the calendar year; gap of at least 90 days; Relaxation under Section 173(5) and the rules for One Person Companies, small companies and dormant companies. It is not part of Section 455. A default is dealt with under Section 173.
Consequence of default: Registrar strikes off name from register of dormant companies (Section 455(6)); Applies where the company fails to comply with the requirements of Section 455. The company is not dissolved. Only the dormant-status entry is removed.
Annual return penalty (Section 92(5)): ₹10,000 + ₹100 per day after the first; maximum ₹2,00,000 (company) and ₹50,000 (officer in default); Applies if the Section 92 annual return is not filed within 60 days of the AGM date.

How to solve Obligations and Compliance of a Dormant Company questions

Use this order for any question on duties of a dormant company. It keeps your answer in ICSI style: provision, analysis, conclusion.

1Identify the company: is it a dormant company that holds a Registrar's certificate, or only an inactive company that has not applied? Dormant duties apply only after status is granted.
2State the provision: Section 455(5) and the prescribed requirements for directors, documents and annual fee.
3Apply the director rule by company type: three for public, two for private, one for OPC. Count the directors given in the facts.
4Check filings: Form MSC-3 with financial statements and fee, within the time the rules prescribe after the financial year end.
5Check Board meetings under Section 173(5): at least one in each half of the calendar year, with a gap of at least ninety days. A breach is a default under Section 173, separate from Section 455.
6Check the consequence: if a requirement of Section 455 is missed (directors, documents, fee), the Registrar can strike off the name from the register of dormant companies (Section 455(6)).
7Write a clear conclusion: state whether status is retained or at risk, and mention that the company may apply to become active again.

Quickest way: Three-item checklist: directors, filing, fee

When to use it: Use for short-note questions or when you have under ten minutes for a 'compliance of a dormant company' question.

Open with one line: Section 455(5) requires prescribed directors, documents and annual fee.
List the three duties as bullets: minimum directors by company type, Form MSC-3 with financial statements, annual fee.
Add the Board meeting relaxation under Section 173(5): one in each half-year, ninety days apart.
Close with Section 455(6): failure to meet Section 455 requirements leads to strike-off from the dormant register, and mention return to active status by application.

Common mistakes in Obligations and Compliance of a Dormant Company

Saying a dormant company has no compliance at all.
Students link 'dormant' with 'inactive' and assume it is exempt from everything.
Fix: Remember the status must be retained. Directors, documents and the annual fee are required under Section 455(5).
Saying non-compliance dissolves the company.
Strike-off sounds like winding up.
Fix: Section 455(6) only strikes the name off the register of dormant companies. The company remains registered.
Mixing up dormant company and inactive company.
Both definitions appear in the Explanation to Section 455.
Fix: An inactive company may apply for dormant status. Only after the Registrar's certificate is it a dormant company with dormant duties.
Quoting the Section 92 sixty-day annual return rule as the dormant company's deadline.
Both deal with annual filing.
Fix: A dormant company files Form MSC-3 under the rules. The sixty-days-from-AGM rule is for annual returns of ordinary companies under Section 92(4).
Writing exact fees or numbers inside Section 455.
Students assume the section contains them.
Fix: The section says 'as may be prescribed'. Attribute directors, forms and fees to the rules.
Forgetting that a dormant company can return to active status.
Students stop at strike-off.
Fix: Add that under Section 455(5) it may become active by an application with the prescribed documents and fee.

Worked examples

Example 1

Kaveri Heritage Holdings Private Limited holds a trademark for a future brand and has obtained dormant status. It has three directors. It filed its financial statements and Form MSC-3 on time but held only one Board meeting in the whole calendar year. Advise on its compliance.

Show the solution

Provision: Section 455(5) requires a dormant company to keep the prescribed minimum directors, file the prescribed documents and pay the annual fee to retain its status.
Directors: a private company needs at least two. It has three, so this is satisfied.
Filing: Form MSC-3 and financial statements were filed on time, so the filing requirement is met.
Board meetings: under Section 173(5), read with the rules, a dormant company is treated as complying if it holds at least one meeting in each half of the calendar year, with a gap of at least ninety days. One meeting in the whole year means one half-year had none.
Consequence: the company has defaulted under Section 173, and the consequences of that section apply to it. This is not a failure to meet the requirements of Section 455 (directors, documents, fee), so it is not by itself a ground for strike-off under Section 455(6).

Answer: The company meets the director and filing requirements of Section 455(5) but has breached the Board meeting requirement of Section 173(5). The breach is a default under Section 173, not a direct ground for strike-off under Section 455(6). It should hold the required meetings in future and remedy the default.

Example 2

Sundaram Projects Limited was incorporated on 1 April 2023. As on the date of review, it has not filed financial statements or annual returns for the financial years 2023-24 and 2024-25, and both filings are overdue. It has not applied for dormant status. Can the Registrar enter it in the register of dormant companies?

Show the solution

Provision: Section 455(4) covers a company that has not filed financial statements or annual returns for two financial years consecutively.
Application of the rule: as on the date of review, the filings for two consecutive financial years, 2023-24 and 2024-25, are overdue.
Procedure: the Registrar first issues a notice to the company. The Registrar then enters its name in the register maintained for dormant companies.
Consequence: it will then have to meet dormant-company requirements under Section 455(5) to retain its status, or apply to become active.

Answer: Yes. Under Section 455(4), the Registrar issues a notice to the company and then enters its name in the register of dormant companies, even though it did not apply.

Exam tips

Write 'as may be prescribed' when you cite Section 455(5), then give the rule-based details separately.
Always give the three duties together: directors, documents, annual fee. Examiners look for all three.
Contrast Section 455(2) application route with Section 455(4) Registrar-initiated entry. Questions often test both.
End with the Section 455(6) consequence and the way back to active status. It completes your conclusion.
If asked about the Section 92 annual return penalty, quote ₹10,000 plus ₹100 per day, with caps of ₹2,00,000 for the company and ₹50,000 for an officer.

Practice questions from Dormant Company

Obligations and Compliance of a Dormant Company: frequently asked questions

What is the minimum number of directors in a dormant company?

Section 455(5) leaves the number to be prescribed. Under the rules it follows the normal minimum: three for a public company, two for a private company and one for a One Person Company.

What is Form MSC-3?

It is the return a dormant company files with the Registrar each year, with its financial statements and the prescribed fee. It helps the company retain its dormant status.

Does a dormant company need to hold Board meetings?

Yes. Under Section 173(5), read with the rules, it is treated as complying if it holds at least one Board meeting in each half of the calendar year, with a gap of at least ninety days between the two meetings. A default here is dealt with under Section 173, not as a Section 455(6) strike-off ground.

What happens if a dormant company does not comply?

If it fails to meet the requirements of Section 455, the Registrar shall strike off the company's name from the register of dormant companies under Section 455(6). The company itself is not dissolved by this.

Can a dormant company become active again?

Yes. Under Section 455(5) it may become an active company by applying with the prescribed documents and fee.