Company Law and Practice · Legal Status and Types of Registered Companies

Dormant Company under Section 455 of the Companies Act, 2013

Updated 11 October 2026 · Fact-checked

A dormant company is a company that has applied to the Registrar under Section 455 for dormant status. It is formed for a future project or to hold an asset or intellectual property and has no significant accounting transaction, or it is an inactive company. The Registrar issues a certificate and records it in the register of dormant companies.

Understand Dormant Company

Some companies are formed but do not trade. A promoter may register a company to hold land, a brand or a patent. Another company may stop business and wait for better times. Section 455 gives such companies a middle path. They can stay on the register with low compliance, instead of being struck off or kept fully active.

Under Section 455(1), two kinds of company can apply for dormant status. First, a company formed and registered for a future project or to hold an asset or intellectual property, and which has no significant accounting transaction. Second, an inactive company.

An inactive company is one that has not carried 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. Note the word "or": meeting any one limb is enough.

A significant accounting transaction is any transaction other than four things: (a) fees paid to the Registrar; (b) payments to fulfil the requirements of the Act or any other law; (c) allotment of shares to fulfil the requirements of the Act; and (d) payments for maintenance of its office and records. So routine statutory spending does not stop a company from qualifying.

Dormant is not the same as inactive. Inactive describes a factual state. Dormant is a status granted by the Registrar. A company can be inactive and never apply. Then it risks removal of its name under Section 248(1)(c) if it has not carried on business for two immediately preceding financial years and has not applied for dormant status. The Registrar can also enter a company in the dormant register on his own motion under Section 455(4).

Key rules to remember

Who may apply (Section 455(1)): Company for future project / to hold asset or IP, with no significant accounting transaction, OR an inactive company; The application goes to the Registrar in the prescribed manner.
Inactive company test: No business or operation, OR no significant accounting transaction, OR no financial statements and annual returns filed, during the last 2 financial years; Any one limb is enough. Do not write "and".
Significant accounting transaction: Any transaction other than: Registrar fees; payments to meet legal requirements; allotment of shares to meet the Act; payments to maintain office and records; These four are excluded, so they do not count as significant.
Registrar's role (Section 455(2), (3)): Allow status + issue certificate; maintain register of dormant companies; Form of certificate and register is as prescribed.
Suo motu entry (Section 455(4)): No financial statements or annual returns for 2 consecutive financial years → Registrar issues notice and enters name in dormant register; Here the company need not have applied.
Retaining status (Section 455(5)): Prescribed minimum directors + prescribed documents + prescribed annual fee; The Act leaves the numbers to the rules. Do not quote a number unless you are sure of the rule.
Reactivation and strike off (Section 455(5), (6)): Active again: application with prescribed documents and fee. Non-compliance: Registrar strikes name off the register of dormant companies; Striking off here is from the dormant register, as stated in the section.

How to solve Dormant Company questions

Use this method for any question on dormant companies, whether it asks for a definition, a procedure or a fact-based problem.

1Identify what is asked: meaning, eligibility, procedure, compliance, reactivation or the difference from an inactive company.
2Start with the provision: name Section 455 of the Companies Act, 2013 and state the rule in your own words.
3Test the company against the two routes: future project or holding asset or IP with no significant accounting transaction, or inactive company.
4For inactivity, check the two-financial-year period and the three limbs. Remove the four excluded payments before deciding whether a transaction is significant.
5State the Registrar's role: considers the application, allows the status, issues a certificate, keeps the register. Mention sub-section (4) if the company filed nothing for two consecutive years.
6Add the consequences: prescribed minimum directors, documents and annual fee to retain status; reactivation by application; striking off the dormant register for non-compliance.
7Close with a clear conclusion that answers the facts given, for example "Hence X Ltd. is eligible to apply for dormant status".

Quickest way: Three-check eligibility test

When to use it: Use it for short fact-based problems where you must say whether a company can get dormant status.

Check purpose: was it formed for a future project or to hold an asset or IP? If yes, check that it has no significant accounting transaction.
If not, check inactivity over the last two financial years: no business, or no significant transaction, or no filings.
Strip out Registrar fees, legal payments, share allotments required by the Act and office and record upkeep. Then decide, and write the conclusion citing Section 455.

Common mistakes in Dormant Company

Treating dormant and inactive as the same thing.
Both words suggest no activity, and the section uses them together.
Fix: Say inactive is a factual condition defined in the Explanation. Dormant is a status granted by the Registrar on application or entered under sub-section (4).
Writing the inactive test with "and" instead of "or".
Students assume all three limbs must be met.
Fix: Remember that meeting any one limb makes a company inactive. Use the word "or" in your answer.
Counting statutory payments as significant accounting transactions.
Any payment looks like a transaction.
Fix: List the four exclusions: Registrar fees, legal-requirement payments, share allotment to meet the Act, and office and records upkeep.
Quoting a fixed number of directors or a fee amount from memory.
Students mix the section with the rules and forms.
Fix: Write that the section requires the prescribed minimum directors, documents and annual fee. Add rule details only if you are certain.
Saying a dormant company is struck off the register of companies and dissolved under Section 455.
Confusion with Section 248.
Fix: Section 455(6) strikes the name off the register of dormant companies. Dissolution on striking off comes under Section 248(5).
Forgetting that the Registrar can enter a company in the dormant register without an application.
Students remember only sub-section (1).
Fix: Add sub-section (4): no financial statements or annual returns for two consecutive financial years, so the Registrar issues a notice and enters the name.

Worked examples

Example 1

Rohan Infra Ltd. was incorporated to develop a township later. For two years it has only paid Registrar fees and the rent and upkeep of its registered office. Can it obtain the status of a dormant company? Explain with reference to the Companies Act, 2013.

Show the solution

Provision: Section 455(1) allows a company formed for a future project or to hold an asset or intellectual property, with no significant accounting transaction, to apply to the Registrar for dormant status.
Facts: Rohan Infra Ltd. was formed for a future project (the township).
Test of transactions: a significant accounting transaction excludes payment of fees to the Registrar and payments for maintenance of the office and records. Its only payments are of these kinds.
So it has no significant accounting transaction.
Procedure: it applies to the Registrar in the prescribed manner. The Registrar considers the application, allows the status and issues a certificate under Section 455(2), and records it in the register of dormant companies.

Answer: Yes. Rohan Infra Ltd. meets the conditions of Section 455(1) and can apply to the Registrar, who may grant dormant status and issue a certificate.

Example 2

Meera Textiles Ltd. has carried on no business for three years and has not filed financial statements or annual returns for the last two financial years. It never applied for dormant status. Discuss the position of the company under the Companies Act, 2013.

Show the solution

Meera Textiles is an inactive company under the Explanation to Section 455(1): it has not carried on business, and has not filed financial statements and annual returns during the last two financial years. Any one limb is enough.
Under Section 455(4), where a company has not filed financial statements or annual returns for two financial years consecutively, the Registrar shall issue a notice to it and enter its name in the register of dormant companies. An application is not needed.
To keep the status, it must have the prescribed minimum directors, file the prescribed documents and pay the prescribed annual fee (Section 455(5)). Failure leads to striking off its name from the register of dormant companies under Section 455(6).
Alternatively, it may become active on an application with the prescribed documents and fee.
Risk: under Section 248(1)(c) the Registrar may act to remove the name of a company that has not carried on business for two immediately preceding financial years and has not applied for dormant status.

Answer: Meera Textiles Ltd. is an inactive company. The Registrar must issue a notice and enter it in the register of dormant companies under Section 455(4), and the company must then meet the Section 455(5) requirements to retain the status.

Exam tips

Begin every answer with Section 455 and the two eligibility routes. Examiners look for the provision first, then the facts.
Learn the exact definitions of inactive company and significant accounting transaction. Questions often turn on them.
For "distinguish" questions, use points: nature (fact vs status), who decides, source (Explanation vs sub-sections), consequence.
Link Section 455 with Section 248(1)(c) in an answer on striking off. It shows you know why a company would apply.
Write "prescribed" for directors, fee and forms unless you are sure of the rules. A correct general statement is safer than a wrong number.

Practice questions from Legal Status and Types of Registered Companies

Dormant Company: frequently asked questions

What is a dormant company under Section 455?

It is a company that has obtained dormant status from the Registrar. It is either formed for a future project or to hold an asset or intellectual property with no significant accounting transaction, or it is an inactive company. The Registrar issues a certificate and enters it in the register of dormant companies.

What is the difference between an inactive company and a dormant company?

An inactive company is defined by facts: no business, or no significant accounting transaction, or no filings during the last two financial years. A dormant company has been given that status by the Registrar. An inactive company can apply to become dormant.

Can the Registrar make a company dormant without an application?

Yes, in one case. Under Section 455(4), if a company has not filed financial statements or annual returns for two financial years consecutively, the Registrar issues a notice and enters its name in the register of dormant companies.

How can a dormant company become active again?

Under Section 455(5), it can make an application accompanied by the prescribed documents and fee. After that it functions as an active company.

What happens if a dormant company does not comply?

The Registrar strikes off the name of the company from the register of dormant companies under Section 455(6) if it fails to meet the requirements of the section, such as minimum directors, documents and annual fee.