Also any inactive person can also apply as dormant company. The 2013 Act states that a company can be classified as a dormant company when it is formed for a future project or to hold an asset or intellectual property and it has no significant accounting transaction. After incorporation even the liquidation process was not easy. Here is why an entrepreneur should read this.ĭormant company: Earlier it used be more of a pain in running and maintaining a company than incorporating it. To make it more stringent these same directors cannot become directors in any other company for five years.

The most decisive being the fact that the board of directors will be held liable if the company does not file tax returns for three years. There are several such instances in the act that finally recognise how start-ups should function. So the one person company comes as a rescue, for this situation. In case of any dispute between the directors, it created a deadlock. There was also a requirement of minimum two directors. As per the earlier act it made it necessary to have two persons to incorporate a company. The new Companies Act introduced the concept of a single person company where any single promoter need not worry about having another partner to incorporate a company.

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