A dormant company is one that has obtained "dormant" status from the Registrar under Section 455 of the Companies Act, 2013, by applying in Form MSC-1, because it was formed for a future project or to hold an asset or intellectual property and has no significant accounting transactions, or because it has been inactive. It files a reduced annual return (Form MSC-3) and can apply in Form MSC-4 to become active again. The MCA status shows "Dormant".
How dormant status works
Section 455 lets a company that is formed for a future project, or to hold an asset or intellectual property, and that has no significant accounting transaction, apply to the Registrar for dormant status. An inactive company, one that has not carried on business or had significant accounting transactions in the last two financial years, or has not filed its financial statements and annual returns for two years, can also apply. Paying fees to the Registrar, paying statutory dues and allotting shares to meet legal requirements do not count as significant transactions.
Once granted, the company files a short annual return of a dormant company instead of the full set, and the status on MCA reads "Dormant". It can apply to become active again when it wants to start business.
Why a dormant buyer is a red flag
A company that has declared to the government that it has no significant transactions should not be placing trade orders. If a "dormant" company is buying from you, one of three things is true: it has started business without applying to become active, the person dealing with you is using the company name for another business, or the status is out of date. Each needs clarity before you give credit.
- Ask the buyer to explain the status and whether MSC-4 has been filed
- Match the GSTIN legal name and status with MCA, using FundRaksha Trust for the GSTIN
- Ask for advance payment or a guarantee from the directors
- Put the CIN and the signatory's name on the purchase order
Recovering from a dormant company
Dormant status does not protect a company from its debts. It remains a legal person that can be served, sued and, for a bounced cheque, prosecuted under Section 138 with its directors under Section 141. The practical problem is assets: a dormant company may hold little apart from the asset it was formed for. Your advocate will look at the charges index and any property before choosing between a suit, an MSMED reference and a cheque case.
The Registrar can also strike off a dormant company that does not comply with Section 455, so watch for the status changing to under process of striking off and object if it does.
How to check for it
- Open mca.gov.in > MCA Services > Master Data > View Company or LLP Master Data.
- Enter the CIN or name and the captcha.
- Read the company status field and the date of the last balance sheet.
- Check the directors listed and the charges tab.
FundRaksha Legal checks status as part of every corporate notice, served within 24 hours, with a 30% fee only on recovery.
Last reviewed: 2026-10-20. Information for Indian businesses; not legal advice.