XYZ Ltd. was incorporated to hold the patent for a new product. The company is expecting to start its commercial production within the next two…
CA Foundation · Business Laws · PYQS · September 2024
XYZ Ltd. was incorporated to hold the patent for a new product. The company is expecting to start its commercial production within the next two years. In the meanwhile, for timely installation, the company has placed the purchase order for plant and machinery with a down payment of 1 crore. Referring to the provisions of the Companies Act, 2013 examine, whether the company can go for acquiring the status of a dormant company?
Suggested Answer and Working Notes:
According to Section 455 of the Companies Act,2013, where a company is formed and registered under this Act 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 an application to the Registrar in such manner as may be prescribed for obtaining the status of a dormant company. In the instant case, XYZ Ltd. has made a significant accounting transaction (down payment of 1crore for plant and machinery), it does not meet the criteria of a dormant company under Section 455 of the Companies Act,2013. Therefore, XYZ Ltd. cannot acquire the status of dormant company.
Topics: The Companies Act, 2013
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