Inactive Company (Section 424 of Companies Act 2017)

“Inactive company” means a company, other than a listed company, which has not been carrying on any other business or operation, or has not made any significant accounting transaction during last two financial years.”

“Significant accounting transaction” means any transaction other than-

1. Payment made by it to fulfill the requirements of this Act or any other law;
2. Allotment of shares to fulfill the requirement of this Act; and
3. Payments for maintenance of its office and records.

Registration – Inactive Company

Where a company, other than a listed company, is formed for a future project or to hold an asset or intellectual property and has no significant accounting transaction, such a company or an inactive company may make application to the registrar.

• The registrar on consideration of the application shall allow the status of inactive company to the applicant and issue a certificate
• The registrar shall maintain a register of inactive companies
• In case a company which has not filed financial statements or annual return for two financial years consecutively, the registrar shall issue a notice to that company and enter the name of such company in the register maintained for inactive companies.