How a dormant company can be incorporated in company law?
Answers
A dormant company is an excellent opportunity to start a company for a future project or hold an asset/intellectual property without having significant accounting transactions* On the other hand if a company has not filed its annual returns for two consecutive years then such a company will also be called as a dormant
The primary objective of the revisions made to the Companies Act 1956 was to have a simplified law that will be able to address the changes taking place in the national and international scenario, enable the adoption of internationally accepted best practices and also provide flexibility in response to the ever-changing business models.
One such aspect which was introduced in the Companies Act 2013 was the concept of Dormant Companies in section 455 of this act. In common parlance, the word “Dormant” means inactive or inoperative. A dormant company is an excellent opportunity to start a company for a future project or hold an asset/intellectual property without having significant accounting transactions* On the other hand if a company has not filed its annual returns for two consecutive years then such a company will also be called as a dormant company.
*Significant accounting transactions would mean transactions other than the basic procedural transactions i.e the payment of fees by a company to the Registrar and also payments to fulfil the requirements of this Act or any other law, allotment of shares to fulfil the requirements of this Act and payments for maintenance of its office and records.