The draft Companies Bill 2011 proposes to change the criteria for dormant companies.
This is being done to better identify vanishing companies, according to an official.
According to the new criteria, any company that has not had any significant business or accounting transaction and has failed to file its balance sheet or annual returns for two years can apply for the status of a dormant company, says the proposed Bill.
Concurrently, the Registrar of Companies (RoC) may also
A company, once identified as dormant, will need to maintain only a minimum number of directors and pay some fees as prescribed in the Rules.
Under the present policy, companies that have not filed their documents for the last three consecutive years or more are identified as ‘dormant'.
According to Mr R.P.N. Singh, Minister of State for Corporate Affairs, there were 1,74,400 such companies as on March 31 and 1,56,474 dormant companies as on December 7, this year. Some of these have been inactive for the past 10 years or more.
If a company does not file its documents with the RoC or stock exchange (if it is listed) for two years, none of its directors are traceable and it is found to be not maintaining its registered office at the address notified with the RoC or stock exchange, it will be deemed a vanishing company.
“The difference between the two is that dormant companies can become active again by making an application. If an owner dies and the company is rejuvenated years later by a new owner, it makes sense to not wind it up,” said an MCA official.
Then again, a company maybe actively doing business, but not filing its returns with the MCA, in which case, the Ministry can bar the company from filing other documents elsewhere.
“The concept of ‘dormant' companies may be open to misuse but the new norms also make it liable for action,” said Mr Pavan Kumar Vijay, Managing Director of Delhi-based consultancy, Corporate Professionals.
The Ministry had introduced an Easy Exit Scheme, 2010 and 2011 for companies that were inactive on or after April 1, 2008. In July, Guidelines were issued for ‘Fast Track Exit Mode' for simplified exit of defunct companies that have been inactive since their incorporation or for one year.
But, these are schemes and not the law and may not be continued after the Bill is implemented, said an official.