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CS Executive · Company Law and Practice · Dormant Company

Kaveri Traders Ltd paid its ROC filing fees, paid statutory dues under another law, allotted shares to meet a requirement of the Act, and paid office rent and record storage charges during the last two years. It did nothing else. For the definition of an inactive company, how are these payments treated?

None of these items is a significant accounting transaction. The definition excludes fees paid to the Registrar, payments to meet requirements of the Act or other laws, allotment of shares to fulfil the Act, and payments for maintaining office and records. So the company may still be regarded as inactive.

  1. AThey are significant accounting transactions, so the company is active
  2. BThey are not significant accounting transactions, since each falls in the excluded categoriesCorrect
  3. COnly the share allotment is excluded; the other payments are significant
  4. DOnly the office rent and record storage payments are excluded

Explanation

The Explanation to section 455 defines a significant accounting transaction as any transaction other than fees paid to the Registrar, payments to fulfil the requirements of the Act or any other law, allotment of shares to fulfil the Act's requirements, and payments for maintaining the office and records. All four items here fall in the excluded categories.

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