Simplifying Your Group Structure: Dormant Status and Strike-Off for Unused Companies

Start with an entity review

Over the years many groups collect companies that no longer do any business — a project company whose work ended, a name registered for a plan that never started. Each one still needs annual filings, audits and director attention. Cleaning up the structure saves cost and reduces compliance risk.

List every company and LLP in the group with its purpose, assets, liabilities, bank accounts, licences and pending filings. Ask a simple question for each: does this entity have a clear business or holding purpose for the next three years? Our guide on entity management and statutory registers explains how to keep this master list current.

Option 1: dormant status under Section 455

A company formed for a future project, or one with no significant accounting transactions, can apply to the Registrar for dormant status. This keeps the company alive with lighter compliance — useful if you may need the entity, name or licences later.

• The company files an application in the prescribed form (MSC-1) with the required approvals
• It must meet the conditions in the rules, such as no pending investigations or defaults
• A dormant company still files a return of dormant status and keeps a minimum number of directors
• It can later apply to become an active company again

Option 2: strike-off under Section 248

If the company is no longer needed, its name can be removed from the register through the fast-track exit route. Typically this needs a special resolution, consent of shareholders as required, settlement of all liabilities, closure of bank accounts and an application in form STK-2 with indemnities and statements. The Registrar publishes a notice and invites objections before striking off the name.

Companies with ongoing disputes, recent changes of name or certain regulatory matters may not be eligible. In those cases, voluntary winding up under the Insolvency and Bankruptcy Code may be the correct route.

Risks to manage before closing

• Transfer or surrender licences, registrations and GST numbers properly
• Settle intra-group balances and document any waiver
• Preserve books and records for the period required by law
• Check whether any guarantee, property or contract stands in the company's name
• Remember that a struck-off company can be restored by order in some cases, so keep records

If assets must move to another group company first, follow the steps in our article on group restructuring and amalgamation basics.

Benefits of a cleaner structure

Fewer companies mean fewer audits, filings and board meetings, cleaner consolidated accounts and easier bank due diligence. It also makes the group's brand architecture easier to explain to customers and partners.

Getting help

ATTPL Consultancy supports ROC compliance and company secretarial processes, and ATTPL Legal can review contracts and liabilities before closure. To review your group structure, contact ATTPL HOLDCO.

Frequently asked questions

Sources and further reading

• Ministry of Corporate Affairs
• Insolvency and Bankruptcy Board of India