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CS Professional · Compliance Management, Audit and Due Diligence · Documentation and Maintenance of Records

Lotus Ventures Pvt Ltd was formed to hold a patent. It has had no significant accounting transaction. During the last two financial years it paid only Registrar filing fees, a statutory audit fee required by law, and office rent for maintaining its records. A secretary is asked whether it can seek dormant status. What is the correct view under section 455?

The company can apply to the Registrar for dormant status. Section 455 covers companies formed to hold intellectual property with no significant accounting transaction, and Registrar fees, payments required by law and office and record maintenance payments are excluded from that term.

  1. AIt cannot, because payment of rent is a significant accounting transaction
  2. BIt cannot, because a company formed for holding intellectual property is excluded
  3. CIt can apply to the Registrar, as those payments are not significant accounting transactionsCorrect
  4. DIt can apply only to the Tribunal, not the Registrar

Explanation

Under section 455(1) a company formed to hold an asset or intellectual property with no significant accounting transaction may apply to the Registrar for dormant status. The Explanation excludes from significant transactions payments of Registrar fees, payments to fulfil legal requirements, and payments for maintaining office and records. All the payments here fall in those exclusions.

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