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

Mehta Infra Pvt Ltd was formed to hold a land parcel for a future project. It has had no significant accounting transaction in the last two years except the payment of ROC fees, statutory filing fees and office maintenance charges. Which view is correct under the Companies Act, 2013 on dormant status?

The company may apply to the Registrar for dormant status. It was formed for a future project or to hold an asset, and payments of Registrar fees, legal compliance costs and office and records maintenance are excluded from significant accounting transactions, so it is treated as having none.

  1. AIt cannot apply, because dormant status is available only to companies that have filed no financial statements
  2. BIt may apply to the Registrar for dormant status, since those payments are not 'significant accounting transactions'Correct
  3. CIt must first allot fresh shares, as that is a significant accounting transaction required for dormant status
  4. DIt becomes dormant automatically on the date of incorporation without any application

Explanation

Section 455(1) permits a company formed for a future project or to hold an asset to apply for dormant status if it has no significant accounting transaction. Fees to the Registrar, payments to meet legal requirements and office and record maintenance are excluded from that term. Hence the company qualifies to apply.

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