The term dormantÂ refers to companies having â€œno significant dealings or transactionsâ€ during a financial year. No significant dealings or transactions mean no entries in the companyâ€™s accounting records. The amount paid for the shares during the initial formation of the company and few preliminary or pre-incorporation expenses incurred for the registration of companies with the Registrar would not amount to significant transactions. Companies that have not filed both their annual returns and balance sheets for three consecutive years (i.e., any of the six required filings) shall be treated as â€œDormant Companiesâ€.
Procedure for activation (Normalizing of a Dormant Company):
Companies which are desirous of getting back to Active status by filing the due annual returns and balance sheets (normalizing the company) are required to file Form 61 with the Ministry of Corporate Affairs.
- The application can be filed for Company, Director, Manager, Secretary or others.
- The detailed application will be as per Company Law Board Regulations, 1991
- General profile and history of the company containing details such as name, date of incorporation, main objects of the company
- Attachments: Detailed application is mandatory to be attached in all the cases of filing. The standard format of the detailed application is available in the MCA site.
On approval of the application in Form 61, the company shall be provided 21 days to file all the annual return and balance sheets for the required financial years. In the event of all the required filings done within the specified time limit of 21 days, the status of the company shall be changed to Active. On failure of such formality, the status of the company would change back to Dormant.
The annual returns would include e-Forms such Form 23B (Intimation by Auditor to Registrar), Form 23AC (Filing of Balance Sheet), Form 23ACA (Filing of Profit & Loss account), Form 20B (Filing of Annual Return for companies with Share Capital), Form 66 (Compliance certificate, if applicable) for all the years of non-compliance.
Once, the dormant company is done with the above mentioned formalities, normalization of the company have been through and the company can now continue its business operations with significant dealings and transactions.