What a dormant company is
A dormant company is a company the Registrar has formally recorded as not trading, on its own application.
Section 455(1) of the Companies Act, 2013 allows two kinds of company to apply: one formed and registered for a future project, or to hold an asset or intellectual property, with no significant accounting transaction; and an inactive company.
An inactive company is one that has not been carrying 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.
The Registrar keeps a register of dormant companies on the MCA portal, so the status is public. That is usually an advantage: a bank or a counterparty can see the company is parked rather than abandoned.
What counts as a significant accounting transaction
This is the test the whole status rests on. Under the Explanation to section 455, a significant accounting transaction is any transaction other than these four:
- payment of fees by the company to the Registrar
- payments made by it to fulfil the requirements of the Companies Act or of any other law
- allotment of shares to fulfil the requirements of the Act
- payments for the maintenance of its office and records
So paying your ROC fees, your professional fees for statutory work, and the cost of keeping the registered office and the records does not break dormancy. One invoice raised to a customer, one sale, or interest earned on a fixed deposit does.
Read that list again if the company has money in the bank. Bank interest credited to the account is a transaction that is not in the list, and it is the single most common reason a dormant company is asked to explain itself.
Who can apply
| Company | Position |
|---|---|
| Private limited company | Can apply, subject to the rule 3 conditions |
| Public limited company | Can apply, if its securities are not listed |
| One person company | Can apply. See OPC annual compliance |
| A company formed for a future project, not yet trading | The clearest case for dormancy |
| A company holding only an asset or intellectual property | The second clearest case |
| A listed company | Cannot apply |
The application in Form MSC-1 goes to the Registrar after a special resolution, or with the consent of at least three fourths of the shareholders in value. Get that consent in writing at the start: it is the item that delays a family company with scattered shareholders.
The eight conditions in rule 3
Rule 3 of the Companies (Miscellaneous) Rules, 2014 sets out what the company must be able to say about itself. All eight have to hold.
| # | Condition |
|---|---|
| 1 | No inspection, inquiry or investigation has been ordered, taken up or carried out against the company |
| 2 | No prosecution has been initiated and is pending against the company |
| 3 | No public deposits are outstanding, and the company is not in default on them or on the interest |
| 4 | No secured loan is outstanding. Where an unsecured loan is outstanding, the lender's consent is filed |
| 5 | There is no dispute in the management or ownership of the company, with a certificate to that effect |
| 6 | No statutory taxes, dues or duties are outstanding to the Central Government, a State Government or a local authority |
| 7 | The company is not in default in the payment of workmen's dues |
| 8 | The company's securities are not listed on any stock exchange in India or outside India |
Conditions 4 and 6 are where most applications fail. A company that stopped trading usually stopped because money ran out, which is exactly when a term loan is still outstanding and a GST or TDS demand is sitting open. Clear those first, or dormancy is not available and the conversation moves to a strike-off or to catching up the filings. See GST notice reply and income-tax notice reply where a demand is the blocker.
What a dormant company may and may not do
| May | May not |
|---|---|
| Hold an asset, a property or intellectual property | Trade, sell, or raise an invoice |
| Wait for a project, a licence or an approval | Earn interest or other income without breaking dormancy |
| Pay ROC fees and the cost of statutory compliance | Carry a secured loan |
| Pay to maintain its registered office and records | Keep its securities listed |
| Allot shares where the Act requires it | Take public deposits |
| Keep its name, CIN and incorporation date | Let its directors' DIN KYC lapse. That obligation is on the individual, not the company. See director KYC |
Dormancy is a compliance status, not a shield. The company still exists, the directors are still directors, and anything owed before dormancy is still owed.
What a dormant company still has to file
Less, but not nothing.
- Return of dormant company, Form MSC-3. Filed annually within 30 days of the end of each financial year, indicating the company's financial position, duly audited by a chartered accountant in practice. This is the filing that keeps the status alive.
- Minimum directors. A dormant public company keeps at least three directors, a private company two, and a one person company one, under rule 6.
- Board meetings. Section 173(5) allows a dormant company to hold one board meeting in each half of the calendar year, with a gap of at least 90 days between them, instead of four meetings a year.
- DIR-3 KYC for the directors. Once every three financial years by 30 June, with the next cycle on 30 June 2028 for directors already compliant.
One point on which the rules are silent, and on which we will not guess: whether a dormant company must also file AOC-4 and MGT-7 for a dormant year. The Companies (Miscellaneous) Rules, 2014 do not deal with it, and the safer course, which is what we recommend, is to keep the annual filings current unless the ROC confirms otherwise for your company. We will tell you what we are filing and why before the year closes. See annual ROC filing.
How long you can stay dormant
Five years is the practical ceiling. Under rule 8, the Registrar shall initiate the process of striking off the name of the company if it remains a dormant company for a period of five consecutive years.
So dormancy is a pause, not a parking space. If the project is five years away, plan the reactivation date at the start, and diarise it. If the company is never coming back, a strike-off now costs less than five years of MSC-3 returns and audits followed by a strike-off anyway.
Two further points on the Registrar's own powers. Under section 455(4), where a company has not filed financial statements or annual returns for two consecutive financial years, the Registrar issues a notice and enters its name in the register of dormant companies. And under section 455(6) the Registrar can strike the name off the dormant register where the company stops meeting the requirements of the status. Dormancy is not something you apply for once and forget.
A note on timing, because it still comes up: the Companies Compliance Facilitation Scheme, 2026, which offered reduced fees for pending filings, dormancy and closure, has closed. Anything filed now is at the normal fee with the usual additional fee on delay.
Coming back: MSC-4 and active status
An application for active status is made in Form MSC-4, accompanied by a return in Form MSC-3, and the Registrar issues a certificate of active status in Form MSC-5.
Plan the reactivation before the business needs it, not after. A company that has been dormant for three years has three years of MSC-3 returns behind it, directors whose DIN KYC has to be current, and a bank that will ask questions about a suddenly active account. The sequence we use is: clear the MSC-3 position, refresh the directors' KYC, file MSC-4, then reopen the operational registrations, because a GST registration that was cancelled during the pause has to be applied for again or revoked. See GST revocation and GST registration.
Dormancy or strike-off: which one fits
| Point | Dormant status | Strike-off |
|---|---|---|
| What happens to the company | Stays on the register, not trading | Name removed, company dissolved |
| Name, CIN and incorporation date | Kept | Lost |
| Government fee | ₹2,000 to ₹20,000 on MSC-1, by authorised capital | ₹10,000 on STK-2 |
| Ongoing cost | MSC-3 every year, audited, plus the annual fee | None after dissolution |
| Ceiling | Five consecutive years, then the Registrar starts striking off | Permanent |
| Coming back | Form MSC-4, an administrative filing | Only by an appeal to the NCLT under section 252. See company revival |
| Blocked by a secured loan or a statutory due | Yes, rule 3 | Also a problem, and pending prosecution blocks it too |
| Directors' liability for the past | Continues | Continues after dissolution too |
| Best for | A real project, licence or asset you intend to use within a few years | A company nobody will need again |
The decision usually turns on one question: is there a specific reason this company, rather than a new one, has to exist in three years? A licence in its name, a trademark, a lease, a bank relationship or a track record for tendering are reasons. Sentiment about the name is not, because the name can be reserved separately. See close a private limited company, which Regikart files for ₹6,999.
Government fees for dormant status
| Item | Government fee |
|---|---|
| MSC-1, application for dormant status | ₹2,000 to ₹20,000 by authorised share capital, on the same slabs as an application to the Regional Director. ₹2,000 where there is no share capital |
| MSC-3, annual return of a dormant company | The annual fee prescribed in the fee rules, confirmed at filing |
| MSC-4, application for active status | Confirmed at filing |
| Audit of the MSC-3 financial position | Charged by your chartered accountant |
| For comparison: STK-2 strike-off | ₹10,000 |
Every capital-linked fee keys off authorised capital, not paid-up capital. Where a figure is shown as confirmed at filing, it is because we will not publish an amount we cannot source.
Our fee for dormant status filings
Fee on quote after a free review. The review is the rule 3 check and the dormancy or strike-off decision, and it is the part that saves money.
| Item | Amount |
|---|---|
| Professional fee: MSC-1 application for dormant status | Fee on quote after a free review |
| Professional fee: MSC-3 annual return, per year | Fee on quote |
| Professional fee: MSC-4 application for active status | Fee on quote |
| For comparison: strike-off of a private limited company | ₹6,999 plus the ₹10,000 government fee. See closure of a private limited company |
| For comparison: bringing overdue annual filings up to date | From ₹4,999. See annual ROC filing |
| Government fees | As in the table above, at actuals |
Professional fees exclude GST at 18%. Government fees, where they apply, are paid at actuals to the department and are shown separately. Fees verified on 27 September 2026.
How we file it
- Rule 3 check. We run the eight conditions against the company's position: investigations, prosecutions, deposits, loans, management disputes, statutory dues, workmen's dues and listing.
- The decision. We put dormancy, strike-off and catching up side by side with what each costs over five years, and you choose.
- Clear the blockers. Where a secured loan or a statutory due stands in the way, we deal with it first, or tell you the route is closed.
- Approvals. Special resolution, or the consent of shareholders holding at least three fourths in value, plus the management and ownership certificate rule 3 requires.
- File MSC-1 with the Registrar, with the DSC of the authorised signatory, and follow it to the MSC-2 certificate.
- Keep the status alive. We diarise the MSC-3 date, arrange the audit of the financial position, and remind you at the four year mark so the five year ceiling never arrives unplanned.
What we need from you
- CIN and the company's MCA login, shared securely
- Last two years of financial statements, audited if available, and the bank statements
- Details of every loan, marking the secured ones, with sanction letters and charge details
- Status of statutory dues: GST, TDS, income tax, professional tax, EPF and ESI
- Any notice, demand, inspection or prosecution involving the company
- Shareholding list, so the three fourths consent can be worked out
- Details of assets or intellectual property the company holds
- The reason for the pause and when you expect to reactivate
Five mistakes we see
- Applying with a term loan outstanding. A secured loan closes the route under rule 3 condition 4.
- Letting bank interest run. Interest credited to the company's account is a transaction outside the four permitted categories.
- Missing an MSC-3. The audited annual return is what keeps the status, and the Registrar can remove the company from the dormant register under section 455(6).
- Treating dormancy as permanent. Five consecutive years, and the Registrar starts the strike-off itself under rule 8.
- Choosing dormancy over a strike-off out of sentiment. If nothing in the company has to exist in three years, five years of audited returns is a worse deal than closing it.