Annual ROC Filings for Inactive and Dormant Companies: Your Options

Many companies stop trading without anyone deciding to close them. A project is shelved, the founders move on, or the company was only ever set up to hold a property or a trademark. The bank account sits quiet and nobody thinks about the company until a notice arrives from the ROC. But a company that isn't doing business still has to file returns every year. This guide explains what an inactive company has to do, and the two alternatives the Companies Act offers: dormant status and strike-off.

No Business Doesn't Mean No Filings

As long as a company is on the register, the Companies Act treats it the same whether it made sales or not. An inactive private company still has to:

• Hold board meetings. A small company or OPC can meet just once in each half of the calendar year, at least 90 days apart.
• Have its accounts audited by its statutory auditor, even if the only entries are bank charges and the audit fee.
• Hold an AGM by 30 September, unless it's an OPC.
• File AOC-4 within 30 days of the AGM and MGT-7 or MGT-7A within 60 days.
• Make sure each director files DIR-3 KYC every year to keep their DIN active.
• File any other forms that apply, such as DPT-3 for outstanding loans from directors or others.
• File an income tax return. Every company must file one, whether or not it has income or a loss.

GST and state registrations carry on too. If the company is still registered for GST, it has to file nil returns or apply to cancel the registration.

What Happens If You Simply Stop Filing

Ignoring an inactive company is the most expensive option.

• Late fees of ₹100 per day apply to each of AOC-4 and MGT-7, with no cap, so two forms left for a year cost over ₹70,000 in additional fees alone.
• After three consecutive years without financial statements or annual returns, every director is disqualified for five years and can't be appointed to the board of any other company in that time. This catches directors who have long since moved on to new ventures.
• The ROC can strike the company off on its own initiative. That doesn't end the directors' liabilities, and a struck-off company's bank account is frozen, so any money or assets left in it become hard to recover.
• Reviving the company later means restoration through the NCLT, which is slower and costlier than staying compliant.

If you already have a backlog, the first step is the same whichever option you choose: list the pending forms and bring the filings up to date, often under an MCA amnesty scheme if one is open.

Option 1: Keep Filing

For a company that will start trading again within a year or two, filing each year as usual is often the simplest choice. A company with no transactions has very little to audit or file, so the annual cost is mostly professional fees.

This is the right option when:

• The company has a near-term plan to start or resume business.
• It has contracts, licences or registrations that would be hard to get again.
• It wants to keep a clean, continuous filing record for investors or lenders.

Option 2: Apply for Dormant Status

Section 455 of the Companies Act lets an inactive company apply to the ROC for dormant status. A dormant company stays on the register, keeps its name and assets, and files a much simpler annual return.

Who qualifies

A company can apply if it was formed for a future project or to hold an asset or intellectual property and has no significant accounting transactions, or if it's an inactive company. A company is inactive if, during the last two financial years, it hasn't carried on business, hasn't had significant accounting transactions, or hasn't filed its financial statements and annual returns.

Significant accounting transactions exclude routine items such as paying ROC fees, paying for the company's statutory obligations, allotting shares to meet legal requirements, and paying for office upkeep.

The company also has to meet several conditions, including:

• No inspection, inquiry, investigation or prosecution against it.
• No public deposits outstanding, and no default in repaying them.
• No outstanding loans, whether owed to banks, related parties or others.
• No dispute over its management or ownership.
• No outstanding statutory dues, taxes, or workers' dues.
• Its securities aren't listed on a stock exchange.

How to apply

1. Pass a special resolution at a general meeting, or get approval from members holding at least three-fourths of the share capital.
2. Prepare a statement of affairs, certified by a chartered accountant in practice.
3. File Form MSC-1 with the ROC within 30 days of the resolution.
4. On approval, the ROC issues a certificate of dormant status in Form MSC-2.

Life as a dormant company

• Instead of AOC-4 and MGT-7, the company files Form MSC-3, a return of dormant company, within 30 days of the end of each financial year, with its financial statements certified by a chartered accountant.
• It must keep the minimum number of directors (two for a private company, one for an OPC) and hold at least one board meeting in each half of the calendar year.
• Directors still need to file DIR-3 KYC.
• The company still has to file its income tax return.

When the company is ready to trade again, it applies in Form MSC-4 to return to active status. It can't simply restart business while dormant; it must file MSC-4 first.

Dormant status is the right option for a company that's holding an asset or intellectual property, or waiting on a project that may take several years to start.

Option 3: Close the Company Through Strike-off

If there's no realistic plan to use the company again, closing it is usually cheaper than paying for audits and filings indefinitely. Under Section 248(2), a company can apply to the ROC to strike its name off the register in Form STK-2.

Before applying, the company must:

• Pay off or settle all its liabilities, and close its bank accounts.
• Pass a special resolution, or get the consent of members holding 75% of the paid-up share capital.
• File its overdue financial statements and annual returns up to the end of the financial year in which it stopped operations.
• Surrender or cancel registrations such as GST.

The application is filed with an indemnity bond from the directors, an affidavit, and a statement of accounts certified by a chartered accountant, with a fee of ₹10,000. The ROC publishes a public notice, and if no one objects, the company is struck off and dissolved.

Strike-off isn't open to every company. One that has changed its name or registered office in the last three months, has sold property or rights for value in the past three months, has applied to the NCLT for a compromise or arrangement, or is being wound up, can't use it.

Choosing Between Them

• Plan to resume business within a year or two: keep filing.
• Holding an asset or IP, or waiting for a long-term project: apply for dormant status.
• No plan to use the company again: clean up the filings and apply for strike-off.
• Not sure: bring the filings up to date first. All three options require it, and it protects the directors in the meantime.

Getting Help

Think Filing helps owners of inactive companies work out the cheapest way forward: we clear any filing backlog, keep minimal-activity companies compliant each year, and handle dormant status applications and strike-off from start to finish.