Udyam Vs. Udyog Aadhaar for MSME Registration

Feb 27, 2025
Private Limited Company vs. Limited Liability Partnerships

Micro, Small, and Medium Enterprises (MSMEs) are the heartbeat of India’s economy, contributing nearly 30% to the country’s GDP and employing over 110 million people. Whether it’s a small textile manufacturer in Surat, a local bakery in Bengaluru, or a budding tech startup in Pune, MSMEs fuel innovation, create jobs, and drive regional development.

To simplify this, the government introduced Udyog Aadhaar, and, in 2020, transitioned to Udyam Registration—a move designed to make life easier for MSMEs.

For many small business owners, dealing with paperwork and compliance can feel overwhelming. Udyam Registration streamlines the process, making it easier to access financial aid and government schemes and even improving business credibility.

Table of Contents

What is Udyog Aadhaar?

Udyog Aadhaar was introduced as a unique identification number for MSMEs to simplify the registration process. It replaced the older Small Scale Industries (SSI) registration system, allowing businesses to register with just a single-page form.

The primary purpose of Udyog Aadhaar was to ease the bureaucratic burden on small businesses and provide them with access to government schemes, subsidies, and financial assistance. This simplified registration made it easier for MSMEs to establish credibility and seek funding opportunities.

What is Udyam Registration?

Udyam Registration is the updated and more comprehensive registration system for MSMEs under the Ministry of Micro, Small, and Medium Enterprises.

Unlike Udyog Aadhaar, Udyam Registration is mandatory for businesses to avail themselves of government benefits after 2020. The online registration allows businesses to self-certify their classification as micro, small, or medium enterprises.

The Udyam Registration Certificate is an official document issued by the Ministry of Micro, Small, and Medium Enterprises (MSME) to businesses that successfully register under the Udyam portal. This certificate serves as legal proof of a business’s MSME status and contains a unique Udyam Registration Number.

Since the entire process is online and paperless, businesses can obtain their Udyam Registration Certificate quickly, ensuring seamless access to financial aid and growth opportunities.

Difference Between Udyog Aadhaar and Udyam Registration

Here is the difference between Udyog Aadhaar and Udyam Registration:

Udyog Aadhar Udyam Registration
Eligibility Available for micro and small enterprises Covers micro, small and medium enterprises
Registration Process Simple single-page form submission More detailed online process with verification
Documents Required Aadhar and PAN details for verification Aadhar, PAN, and GSTIN required for verification
Legal Status Optional for MSMEs Mandatory to access government benefits
Identification Number The unique identification number for Udyog Aadhar was known as Udyog Aadhar Memorandum The unique identification provided for Udyam is known as the Udyam registration number
Government Schemes Limited access to schemes Priority access to MSME-focused schemes & initiatives
Validity No specific validity Udyam certificate is valid for a lifetime

{{pvt-cta}}

Top 5 Benefits of Udyog Aadhaar

1. Access to Government Schemes and Subsidies

  • Udyog Aadhaar holders could apply for various MSME support programs, including credit-linked subsidies and financial aid.

2. Easier Loan Approvals

  • Banks and financial institutions provided loans at lower interest rates to Udyog Aadhaar-registered businesses.

3. Enhanced Business Credibility

  • Registration helped businesses gain recognition and build trust with customers, investors, and suppliers.

4. Simplified Government Tender Applications

  • Businesses could easily apply for government tenders, increasing their opportunities in public sector projects.

5. Tax Rebates and Concessions

  • Udyog Aadhaar allowed businesses to benefit from various tax exemptions, reducing operational costs.

5 Key Benefits of Udyam Registration

1. Official Recognition and Credibility

  • Udyam Registration serves as proof of a business’s legal status, making it easier to secure partnerships and attract investors.

2. Better Financial Support

  • MSMEs registered under Udyam get easier access to bank loans, credit facilities, and government funding programs.

3. Simplified Access to Government Schemes

  • Registered businesses can avail themselves of subsidies, grants, and financial incentives tailored for MSMEs.

4. Tax Benefits

  • Udyam-registered MSMEs enjoy tax rebates and exemptions, reducing their overall financial burden.

5. Priority Access to Government Contracts

  • Udyam Registration ensures that businesses get priority consideration in public sector tenders, helping them grow through government contracts.

How to Migrate to Udyam Registration?

With Udyam Registration now mandatory for government benefits, MSMEs registered under Udyog Aadhaar must migrate to the new system. The migration process is straightforward:

  1. Visit the Udyam Registration Portal
    • Go to the official Udyam Registration website.
  2. Enter Udyog Aadhaar Details
    • Provide your Udyog Aadhaar number along with Aadhaar-linked mobile details.
  3. Submit PAN and GSTIN
    • Enter PAN and GSTIN details for verification.
  4. Complete Self-Declaration
    • Fill in business classification details based on investment and turnover.
  5. Receive Udyam Registration Certificate
    • After successful verification, the Udyam Registration certificate is generated.

Migrating to Udyam Registration ensures businesses continue to enjoy financial aid, easier access to credit, and government compliance.

Register Your Limited Liability Company With Razorpay Rize now at just Rs. 1499*!

Conclusion

Understanding the differences between Udyog Aadhaar and Udyam Registration is essential for MSMEs to stay compliant and competitive.

While Udyog Aadhaar served as a stepping stone for MSMEs, Udyam Registration is now mandatory for accessing government benefits, funding opportunities, and enhanced business credibility.

Migrating to Udyam Registration ensures businesses remain eligible for financial support and government schemes, enabling them to grow and thrive in India’s evolving economic landscape. If you haven't yet migrated, now is the time to secure your business's future with Udyam Registration!

Frequently Asked Questions

rize image

Register your Business at just 1,499 + Govt. Fee

Register your business
rize image

Register your Private Limited Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your One Person Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your Business starting at just 1,499 + Govt. Fee

Register your business
rize image

Register your Limited Liability Partnership in just 1,499 + Govt. Fee

Register your business

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

What is the difference between Udyam and Udyog Aadhaar?

Udyog Aadhaar was the earlier system for MSME registration, while Udyam Registration replaced it in 2020 to make the process more streamlined and mandatory for availing government benefits. Udyam requires additional details like PAN and GSTIN and provides better government support.

Is it mandatory to convert Udyog Aadhaar to Udyam?

Yes, businesses that were previously registered under Udyog Aadhaar must migrate to Udyam Registration to continue availing of government schemes, subsidies, and benefits.

Can I have two Udyam registrations?

No, an enterprise can have only one Udyam Registration linked to its PAN. However, a business can list multiple activities under the same registration.

How long does it take to get a Udyam number?

After obtaining Udyam Registration, businesses should:

What is the next step after Udyam registration?

After obtaining Udyam Registration, businesses should:

  • Download the Udyam Certificate for records.
  • Apply for government schemes and financial support.
  • Update business details if required.
  • Utilise benefits such as loans, tax exemptions, and subsidies.

Who is eligible for Udyam?

Micro, Small, and Medium Enterprises (MSMEs) engaged in manufacturing, production, processing, or service activities are eligible for Udyam Registration. The eligibility is based on turnover and investment limits defined by the government.

Who is eligible for Udyog Aadhaar?

Previously, Micro and Small Enterprises could register under Udyog Aadhaar. However, this system has been replaced by Udyam Registration, which is now the mandatory process.

Is Udyog Aadhaar free of cost?

Yes, Udyog Aadhaar registration was free of cost. Similarly, Udyam Registration is also completely free and can be done online through the official MSME portal.

Akash Goel

Akash Goel is an experienced Company Secretary specializing in startup compliance and advisory across India. He has worked with numerous early and growth-stage startups, supporting them through critical funding rounds involving top VCs like Matrix Partners, India Quotient, Shunwei, KStart, VH Capital, SAIF Partners, and Pravega Ventures.

His expertise spans Secretarial compliance, IPR, FEMA, valuation, and due diligence, helping founders understand how startups operate and the complexities of legal regulations.

Read More

Related Posts

Form DPT-3: Due Date, Purpose, Return Date

Form DPT-3: Due Date, Purpose, Return Date

Running a business in India comes with its fair share of challenges—managing finances, growing revenue, and keeping up with endless compliance requirements. One such crucial yet often overlooked filing is Form DPT-3.

This annual filing is mandatory for all companies in India—except government companies—to report details of deposits, loans, and non-deposit receipts. The Form DPT-3 due date is June 30th each year, making it essential for businesses to meet this deadline to avoid penalties and maintain good standing with regulatory authorities.

Table of Contents

What is Form DPT-3?

Form DPT-3 is an annual return form that companies must file to report deposits and outstanding loan details. It is a statutory requirement under the Companies Act 2013, ensuring that businesses remain compliant and transparent in their financial dealings. The form covers:

  • Deposits received by the company
  • Non-deposit loans taken from directors, shareholders, or other sources
  • Any other amounts that are classified as financial liabilities

The primary objective of this filing is to prevent malpractices related to undisclosed financial transactions and to strengthen corporate governance.

<H2> Applicability and Requirements for DPT-3 Form

Form DPT-3 filing applies to all companies except government companies. This includes:

Key requirements for DP3 include:

  • Annual Filing Deadline: Companies must submit Form DPT-3 by June 30 each year, covering financial transactions for the previous fiscal year.
  • Financial Year Coverage: The form includes details of financial liabilities up to March 31 of the relevant financial year.
  • Auditor Verification: Companies must ensure that the reported figures are verified by auditors to maintain accuracy and compliance.

Penalties for Non-Compliance with Form DPT-3 Filing

Failure to file Form DPT-3 on time can result in significant penalties under the Companies Act 2013. The penalties include:

  • A flat penalty of up to ₹5,000 for the company.
  • Additional daily fines of ₹500 per day for continued non-compliance.
  • Officers responsible for the filing may also be penalised with additional fines.

Ensuring timely submission is essential to avoid legal repercussions and unnecessary financial burdens.

Preparing for the DPT-3 Filing

To ensure a smooth DPT-3 filing process, companies should follow these steps:

  1. Review Financial Transactions: Examine all deposits, loans, and non-deposit receipts received during the financial year.
  2. Obtain Audit Reports: Work with auditors to verify and validate the data before submission.
  3. Gather Necessary Documentation: Collect supporting documents such as loan agreements, receipts, and auditor reports.
  4. Consult Experts: If there are complexities in reporting, seek advice from compliance professionals or legal experts.

Information Required to Fill DPT-3 Form

Companies need to provide the following details while filling out Form DPT-3:

Other financial liabilities as per the balance sheet-

  • Net Worth of the Company: The net worth is calculated as total assets minus total liabilities based on the most recent financial year-end.
  • Particulars of Charge (if any): Companies must disclose any charges or encumbrances on their assets. This includes mortgages, liens, or any other security interests held against company-owned properties or resources.
  • Total Amount Outstanding as of March 31st, 2020 including-  
  • Deposits received from individuals or entities.
  • Loans borrowed from banks, directors, or other companies.
  • Any other non-deposit receipts that need disclosure.
  • Particulars of Credit Rating (If Applicable): Companies with an assigned credit rating should provide: Name of the credit rating agency (e.g., CRISIL, ICRA, CARE, etc.) and the rating assigned

Form DPT-3 Due Date

The due date for filing Form DPT-3 is June 30th of every financial year. Companies should ensure timely submission to avoid penalties and maintain regulatory compliance.

Documents Required to File DPT-3 Form

To complete the Form DPT-3 filing, companies must submit:

  • List of Depositors
  • Deposit Insurance Contract
  • Copy of the Trust Deed
  • Copy of the Instrument Creating Charge
  • Details of Liquid Assets
  • Outstanding Receipts of Money or Loans
  • Auditor’s Certificate

Looking to register your company online? Get started with Razorpay Rize’s Company Registration services! 

Conclusion

Form DPT-3 is a critical compliance requirement for companies in India. Filing this might feel like just another compliance task, but it’s actually a crucial step in keeping your business financially transparent and legally sound. Missing the deadline can lead to penalties, unnecessary stress, and last-minute scrambling. Instead of rushing at the last minute, take a proactive approach—review your records, coordinate with your auditors, and get your documents in order well in advance.

Frequently Asked Questions

rize image

Register your Business at just 1,499 + Govt. Fee

Register your business
rize image

Register your Private Limited Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your One Person Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your Business starting at just 1,499 + Govt. Fee

Register your business
rize image

Register your Limited Liability Partnership in just 1,499 + Govt. Fee

Register your business

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

Is Form DPT-3 mandatory?

Yes, Form DPT-3 is mandatory for all companies (except government companies) that have received deposits, loans, or other non-deposit receipts. It must be filed annually, as per the Companies Act of 2013, to ensure financial transparency and regulatory compliance.

What is the penalty for delay in DPT-3?

If a company fails to file Form DPT-3 on time, penalties may include:

  • A fine of ₹5,000 for the company.
  • An additional fine of ₹500 per day for continued non-compliance.
  • Officers in default may also face penalties, which can go up to ₹2 lakh.

What is the fee for DPT-3?

The filing fee for Form DPT-3 depends on the company’s authorised share capital:

  • ₹200 for companies with capital up to ₹1 lakh
  • ₹300 for ₹1-5 lakh
  • ₹400 for ₹5-25 lakh
  • ₹500 for ₹25 lakh-1 crore
  • ₹600 for ₹1 crore or more

Late filing attracts additional fees, increasing with the delay period.

Is DPT-3 applicable to LLPs?

No, Form DPT-3 is not applicable to LLPs (Limited Liability Partnerships). It applies only to private and public limited companies, as LLPs are governed by the LLP Act of 2008 and have different compliance requirements.

Can we file DPT-3 after the due date?

Yes, you can file DPT-3 after the due date, but it will attract late filing fees and penalties. To avoid unnecessary financial and legal consequences, it is advisable to file before the June 30 deadline.

Is DPT-3 mandatory every year?

Yes, DPT-3 is an annual compliance requirement that must be filed every year by June 30, reporting financial data from the previous fiscal year.

What is the purpose of filing DPT-3?

The purpose of Form DPT-3 is to:

  • Ensure financial transparency by reporting deposits, loans, and non-deposit transactions.
  • Help regulators track company borrowings and financial stability.

Ensure compliance with the Companies Act of 2013 and avoid penalties.

Form ADT-1: A Complete Guide to Auditor Appointment Filing

Form ADT-1: A Complete Guide to Auditor Appointment Filing

Filing Form ADT-1 is a crucial step in ensuring compliance with the Companies Act regarding the appointment of the first auditor. This form notifies the Ministry of Corporate Affairs (MCA) about the auditor's appointment within 30 days of company incorporation. It is essential for companies to understand the importance of this form and adhere to the filing requirements and deadlines to avoid penalties.

Table of Contents

What is Form ADT-1?

Form ADT-1 is a mandatory filing under the Companies Act, 2013, used to inform the Registrar of Companies (ROC) about the appointment of an auditor in a company.

Key Points on Auditor Appointment & Filing Requirements

1. Appointment of First Auditor (New Companies)

For companies (excluding government companies):

The Board of Directors must appoint the first auditor within 30 days of incorporation.

If the Board fails to do so, the members must appoint the first auditor within 90 days at an Extraordinary General Meeting (EGM).

The first auditor holds office until the conclusion of the first Annual General Meeting (AGM).

Note: Filing Form ADT-1 is NOT required for the first auditor’s appointment. However, companies may choose to file it for compliance and record-keeping purposes.

2. Appointment of Subsequent Auditors

After the first AGM, companies must appoint an auditor for a five-year term (for private and public companies) or as per shareholder approval.

Form ADT-1 must be filed within 15 days of the auditor’s appointment to inform the ROC.

Timely filing of Form ADT-1 is crucial for companies to:

  • Comply with legal requirements under the Companies Act
  • Avoid penalties and legal consequences
  • Maintain transparency in auditor appointments
  • Ensure proper oversight of financial reporting

Who Needs to File Form ADT-1?

Is Form ADT-1 mandatory for all companies?

All companies incorporated under the Companies Act, 2013, are required to file Form ADT-1, including:

What happens if a company fails to file Form ADT-1?

Failure to file Form ADT-1 within the prescribed time can result in penalties and legal consequences for the company and its directors. The company may be fined between ₹25,000 to ₹5,00,000, and every defaulting officer may be punishable with imprisonment of up to 1 year, a fine between ₹10,000 to ₹1,00,000, or both.

Law Governing the Form ADT-1

The filing of Form ADT-1 is mandated under Section 139(1) of the Companies Act, 2013. This section requires companies to file the form with the ROC to inform them about the auditor's appointment, which is done after the AGM. The form contains essential details about the appointed auditor, such as their name, address, membership number, and date of appointment. Companies must submit Form ADT-1 within 15 days of the AGM to fulfil their legal obligations and avoid potential penalties for non-compliance.

Requirements for Filing Form ADT-1

  • The company has appointed an auditor as per the provisions of the Companies Act, 2013
  • The appointed auditor has provided written consent to act as the auditor
  • The auditor has issued a certificate confirming they are not disqualified under Section 141 of the Act
  • The company has obtained a Director Identification Number (DIN) for the signing director
  • The signatory has a valid Digital Signature Certificate (DSC)

Companies must attach the necessary supporting documents, such as the board resolution for auditor appointment, auditor's consent letter, and certificate of eligibility while filing the form. Failing to meet these requirements can lead to the rejection of the form by the ROC.

Fees for Filing Form ADT-1

The filing fees for Form ADT-1 depend on the company's authorised share capital, as per the table below:

Authorised Share Capital Filing Fee
Up to ₹1,00,000 ₹200
₹1,00,001 to ₹5,00,000 ₹300
₹5,00,001 to ₹10,00,000 ₹400
Above ₹10,00,000 ₹600

For LLP Companies without share capital, the filing fee is a flat ₹200.

Late filing of Form ADT-1 attracts additional fees, which increase based on the delay duration:

  • Up to 30 days delay: 2 times the normal fees
  • 31 to 60 days delay: 4 times the normal fees
  • 61 to 90 days delay: 6 times the normal fees
  • 91 to 180 days delay: 10 times the normal fees
  • More than 180 days delay: 12 times the normal fees

Due Date For Filing MCA Form ADT-1

The due date for filing Form ADT-1 depends on whether the company is newly incorporated or existing:

For newly incorporated companies:

  • ADT-1 for the first auditor must be filed within 15 days of the first Board Meeting
  • This Board Meeting must be held within 30 days of incorporation, where the first auditor is appointed

For existing companies:

  • Form ADT-1 should be filed within 15 days of the AGM where the auditor was appointed or reappointed
  • Example: If the AGM was held on September 30, 2023, the ADT-1 due date would be October 14, 2023

While filing the form, companies must provide the following details about the appointed auditor:

  1. Auditor's category (individual or firm)
  2. Membership number of the auditor or firm's registration number
  3. Address and email ID of the auditor
  4. Permanent Account Number (PAN) of the auditor
  5. Period of appointment
  6. Membership number of the previous auditor in case of vacancy
  7. Date of appointment and AGM date
  8. Details of any casual vacancy (date and reason)

Along with these details, companies must attach the following supporting documents:

  1. Certified copy of the Board Resolution for auditor appointment
  2. Written consent of the auditor to act as such
  3. Certificate by the auditor confirming their eligibility under Section 141
  4. Copy of the intimation letter sent by the company to the auditor regarding their appointment

Penalty on Delayed Filing of Form ADT-1

Delayed filing of Form ADT-1 attracts penalties, which increase based on the duration of the delay:

  • Up to 30 days delay: Twice the normal filing fees
  • 31 to 60 days delay: Four times the normal filing fees
  • 61 to 90 days delay: Six times the normal filing fees
  • 91 to 180 days delay: Ten times the normal filing fees
  • More than 180 days delay: Twelve times the normal filing fees

Companies must be mindful of the ADT-1 due date and ensure timely filing to avoid these escalating penalty fees. Repeated non-compliance can also lead to more severe consequences, such as fines and legal action against the company and its officers.

Important Points to Consider Regarding Form ADT-1

  • Filing Form ADT-1 is mandatory for all types of companies, including private, public, and one-person companies.
  • The responsibility of filing the form lies with the company and its directors, not the auditor.
  • Form ADT-1 must be filed even in case of filling casual vacancies in the auditor's office.
  • Companies should file Form ADT-1 for the appointment of the first auditor as well.
  • Timely filing of the form with all necessary details and documents is crucial to avoid penalties and legal complications.

Process for Filing Form ADT-1

  1. Obtain a Digital Signature Certificate (DSC) for at least one Director of the company from a licensed Certifying Authority
  2. Ensure the signing director has a valid Director Identification Number (DIN)
  3. Download Form ADT-1 from the MCA portal
  4. Fill in the required company and auditor details accurately
  5. Attach the necessary supporting documents (Board Resolution, auditor consent, eligibility certificate, etc.)
  6. Verify the form using the director's DSC
  7. Submit the form electronically on the MCA portal
  8. Pay the requisite filing fees online using a credit card, debit card, or net banking
  9. Receive an acknowledgement email from MCA as proof of filing

Frequently Asked Questions

rize image

Register your Business at just 1,499 + Govt. Fee

Register your business
rize image

Register your Private Limited Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your One Person Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your Business starting at just 1,499 + Govt. Fee

Register your business
rize image

Register your Limited Liability Partnership in just 1,499 + Govt. Fee

Register your business

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

What is the ADT-1 form?

Form ADT-1 is a mandatory form filed by companies to inform the Registrar of Companies (ROC) about the appointment of an auditor, except for the first auditor. It must be filed within 15 days of the appointment of a subsequent auditor.

Is ADT-1 mandatory for the first auditor in OPC?

Yes, filing ADT-1 for the first auditor is mandatory for all companies, including OPCs.

Can we file ADT-1 without filing ADT-3?

Yes, Form ADT-1 can be filed independently without filing ADT-3, which is used for the resignation of an auditor.

Who will file ADT 2?

Form ADT-2 is filed by the auditor to the company and ROC in case of their resignation. The company does not file this form.

What is the time limit for filing ADT-1 for the first auditor?

For newly incorporated companies, the first auditor appointment due date for filing ADT-1 is within 15 days of the first Board Meeting held within 30 days of incorporation.

Who is the first auditor of OPC?

In an OPC, the Board of Directors appoints the first auditor within 30 days of incorporation, and their appointment is ratified in the first AGM.

Akash Goel

Akash Goel is an experienced Company Secretary specializing in startup compliance and advisory across India. He has worked with numerous early and growth-stage startups, supporting them through critical funding rounds involving top VCs like Matrix Partners, India Quotient, Shunwei, KStart, VH Capital, SAIF Partners, and Pravega Ventures.

His expertise spans Secretarial compliance, IPR, FEMA, valuation, and due diligence, helping founders understand how startups operate and the complexities of legal regulations.

Read more
Dormant Company Meaning: Section 455 of Companies Act 2013

Dormant Company Meaning: Section 455 of Companies Act 2013

The concept of a dormant company was introduced in the Companies Act, 2013 to allow businesses to maintain their legal status while having minimal operations. Dormant company registration under Section 455 of the Act is a strategic move for companies planning to become temporarily inactive due to various reasons, such as holding assets, protecting intellectual property, or preparing for future projects. This article delves into the meaning, eligibility, benefits, and process of obtaining dormant company status in India.

Table of Contents

What Is a Dormant Company?

Under the Companies Act, 2013, a dormant company refers to an entity that is temporarily inactive, with no significant accounting transactions during a financial year. The definition of a dormant company encompasses companies that are:

  • Incorporated for future projects
  • Established to hold assets or intellectual property
  • Not engaged in any significant financial transactions

To be eligible for dormant company status, a company must meet the following criteria:

  • No significant accounting transactions during the last two financial years
  • No filing of financial statements and annual returns with the Registrar of Companies (ROC) in the preceding two financial years

It's important to note that a company can remain dormant for a maximum of five consecutive financial years. After this period, the company must either commence operations or apply for an extension of dormant status with the ROC.

Is a Dormant Company Allowed To Trade?

A dormant company is not allowed to conduct significant business transactions, such as:

  • Buying or selling goods and services
  • Engaging in revenue-generating operations
  • Undertaking any other form of trade

However, a dormant company can carry out certain essential activities, including:

  • Paying fees and fulfilling compliance requirements under the Companies Act or other applicable laws
  • Maintaining its registered office and records
  • Allotting shares to shareholders

Engaging in active trading or substantial business transactions may lead to the loss of dormant company status. Therefore, it is crucial for business owners to ensure that their dormant company remains compliant with the prescribed regulations.

A Brief Overview of Dormant Status Under the Companies Act 2013

Section 455 of the Companies Act 2013 introduced the concept of dormant companies to provide a legal framework for businesses that wish to temporarily suspend their operations while maintaining their legal status. This provision allows companies to:

  • Preserve their assets and intellectual property
  • Reduce compliance costs during periods of inactivity
  • Keep their company name reserved for future projects

Meaning of Inactive Company

An inactive company, as per the Companies Act 2013, is a company that:

  • Has not conducted any significant financial transactions during the last two financial years
  • Has not filed financial statements and annual returns with the ROC for the preceding two financial years

Reasons for Obtaining the Status of a Dormant Company

There are several reasons why a company may choose to obtain dormant company status:

  • To preserve the company name for future business ventures
  • To hold assets or intellectual property without actively engaging in business operations
  • To reduce compliance costs and regulatory burdens during periods of inactivity
  • To facilitate business restructuring or strategic planning
  • To maintain legal status while the promoters or directors are unavailable due to personal reasons, such as illness, travel, or sabbatical

Top 5 Benefits of Opting for Dormant Company Status

  1. Reduced Compliance Requirements: Dormant companies are subject to significantly fewer compliance obligations under the Companies Act 2013. This includes exemptions from holding frequent board meetings, appointing auditors, and filing detailed annual returns.
  2. Cost Savings: By reducing compliance requirements, dormant companies can save on administrative expenses, such as auditor fees, legal costs, and filing charges. This can be particularly beneficial for small businesses and start-ups looking to minimise overhead costs.
  3. Brand Name Protection: Registering as a dormant company allows businesses to protect their brand name and prevent others from registering a similar name. This is crucial for companies that have invested in building a strong brand identity and want to preserve it for future use.
  4. Flexibility for Future Business Plans: Dormant company status provides businesses with the flexibility to reactivate their operations when the time is right. This can be particularly useful for companies that are waiting for market conditions to improve or for key personnel to return from extended absences.
  5. Simplified Annual Filings: Dormant companies are required to file a simplified version of the annual return, known as Form MSC-3. This form requires less detailed information compared to the annual returns filed by active companies, reducing the administrative burden on business owners.

By weighing the benefits of dormant company status against the specific needs and goals of their business, entrepreneurs can make informed decisions about whether this legal structure is suitable for their situation.

Mandatory Requirements for Obtaining Dormant Status

To be eligible for dormant company status under Section 455 of the Companies Act 2013, a company must fulfil certain mandatory requirements:

  1. No Significant Accounting Transactions: The company must not have carried out any significant accounting transactions during the financial year for which dormant status is sought. This excludes transactions related to the allotment of shares, payment of fees to the ROC, and maintenance of the company's office and records.
  2. No Outstanding Liabilities: The company must not have any outstanding loans, whether secured or unsecured, or any other outstanding liabilities. If there are any outstanding unsecured loans, the company must obtain a no-objection certificate from the lenders before applying for dormant status.
  3. No Pending Regulatory Actions: There should be no pending inspections, inquiries, or investigations against the company by any regulatory authorities. Additionally, no prosecution proceedings should be initiated against the company under any law.
  4. Up-to-date Statutory Filings: The company must have filed all its pending returns, including annual returns and financial statements, with the ROC before applying for dormant status.
  5. Shareholder Approval: The company must obtain approval from its shareholders through a special resolution passed at a general meeting. Alternatively, the company can obtain the consent of at least 3/4th of its shareholders by value through a written resolution.

How to File for Dormant Status: A Step-By-Step Guide

Filing for dormant company status involves a series of steps that must be followed in accordance with the provisions of the Companies Act 2013:

  1. Convene a Board Meeting: The company's board of directors must convene a meeting to discuss and approve the proposal for obtaining dormant status. The board resolution should authorise the filing of the necessary application and documents with the ROC.
  2. Obtain Shareholder Approval: The company must obtain approval from its shareholders either through a special resolution passed at a general meeting or through the written consent of at least 3/4th of the shareholders by value.
  3. Prepare the Statement of Affairs: The company must prepare a statement of affairs, including a balance sheet and profit and loss account, as of the date of the application for dormant status. This statement should be verified by an affidavit from the company's directors.
  4. File Form MSC-1: The company must file Form MSC-1 with the ROC, along with the necessary supporting documents, including the board resolution, shareholder approval, statement of affairs, and any other relevant documents as specified in the Companies Act 2013.
  5. Pay the Prescribed Fees: The company must pay the prescribed fees for filing Form MSC-1, as specified in the Companies (Registration Offices and Fees) Rules, 2014.
  6. Obtain Certificate of Dormant Status: Upon verification of the application and supporting documents, the ROC will issue a certificate of dormant status to the company in Form MSC-2.

It is important to note that the entire process of filing for dormant company status must be completed within 30 days of obtaining shareholder approval. Companies should seek the assistance of a qualified professional, such as a company secretary or chartered accountant, to ensure compliance with the prescribed procedures and timelines.

ROC Forms for Registering Dormant Company

Form Name Purpose
Form MSC-1 Application for obtaining dormant company status
Form MSC-3 Return of dormant companies
Form MSC-4 Application for seeking the status of an active company
  • Form MSC-1: This form is used to apply for obtaining dormant company status. It must be filed with the ROC within 30 days of obtaining shareholder approval. The form requires details such as the company's name, registered office address, directors' particulars, and the reasons for seeking dormant status.
  • Form MSC-3: This form is used to file the annual return of a dormant company. It must be filed within 30 days from the end of each financial year. The form requires details such as the company's financial position, shareholding pattern, and any changes in the directors' or registered office address.
  • Form MSC-4: This form is used to apply for seeking the status of an active company. It must be filed with the ROC when a dormant company wants to commence business operations. The form requires details such as the company's name, registered office address, and the reasons for seeking active status.

Annual Compliance for Dormant Company

While dormant companies enjoy certain relaxations under the Companies Act 2013, they are still required to fulfil essential annual compliance tasks in four key areas:

  1. Accounting and Financial Statements: Dormant companies must maintain proper books of accounts and prepare financial statements, including a balance sheet and profit and loss account, for each financial year. These financial statements must be approved by the board of directors and presented at the annual general meeting.
  2. Statutory Audit: Dormant companies are required to appoint a statutory auditor to conduct an audit of their financial statements. However, dormant companies are exempt from the requirement of auditor rotation, which is mandatory for active companies.
  3. Tax Return Filings: Dormant companies must file their income tax returns annually, even if they have not generated any income during the financial year. They are also required to comply with other applicable tax laws, such as the Goods and Services Tax (GST) and Tax Deducted at Source (TDS) provisions.
  4. ROC Filings: Dormant companies must file an annual return in Form MSC-3 with the ROC within 30 days from the end of each financial year. This form requires details such as the company's financial position, shareholding pattern, and any changes in the directors' or registered office address.
Compliance Requirement Frequency
Board Meetings Twice a year
Annual General Meeting Once a year
Financial Statements Annually
Statutory Audit Annually
Income Tax Return Filing Annually
Form MSC-3 Filing Annually

By fulfilling these annual compliance requirements, dormant companies can ensure that they remain in good standing with the regulatory authorities and avoid any penalties or legal consequences.

Reactivation of a Dormant Company

A dormant company can be reactivated and commence business operations by following the prescribed procedure under the Companies Act 2013:

  1. Convene a Board Meeting: The company's board of directors must convene a meeting to discuss and approve the proposal for reactivating the company. The board resolution should authorise the filing of the necessary application and documents with the ROC.
  2. File Form MSC-4: The company must file Form MSC-4 with the ROC, along with the necessary supporting documents, including the board resolution and any other relevant documents as specified in the Companies Act 2013.
  3. Pay the Prescribed Fees: The company must pay the prescribed fees for filing Form MSC-4, as specified in the Companies (Registration Offices and Fees) Rules, 2014.
  4. Obtain Certificate of Active Status: Upon verification of the application and supporting documents, the ROC will issue a certificate of active status to the company in Form MSC-5.

Once the company has obtained the certificate of active status, it can commence business operations and is required to comply with all the provisions of the Companies Act 2013 applicable to active companies, including regular compliance requirements such as holding board meetings, filing annual returns, and appointing auditors.

Conclusion

Dormant company under Section 455 of the Companies Act 2013 is a strategic tool for businesses to preserve their legal identity while suspending operations. It allows companies to protect their brand name, reduce compliance costs, and maintain flexibility for future ventures. To benefit from this status, businesses must meet eligibility criteria and comply with statutory requirements. Seeking professional assistance is advisable to navigate the process effectively and avoid legal issues. This approach is ideal for future projects, asset holding, or temporary business pauses, offering a cost-effective solution for maintaining legal existence.

Frequently Asked Questions

rize image

Register your Business at just 1,499 + Govt. Fee

Register your business
rize image

Register your Private Limited Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your One Person Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your Business starting at just 1,499 + Govt. Fee

Register your business
rize image

Register your Limited Liability Partnership in just 1,499 + Govt. Fee

Register your business

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

How does a company become dormant?

To become a dormant company, a company must pass a special resolution in a general meeting and file Form MSC-1 with the Registrar of Companies, along with the necessary documents and fees.

How long is the company's dormant status?

A company can maintain its dormant status for a maximum of five consecutive financial years. After this period, the company must either reactivate or apply for voluntary closure.

What forms are needed for a dormant company status application?

The key forms required for a dormant company status application are e-Form MGT-14 (filed within 30 days of passing the special resolution) and e-Form MSC-1 (filed within 30 days after the special resolution to apply for dormant status).

Can a dormant company be active?

Yes, a dormant company can reactivate and become an active company by filing Form MSC-4 with the Registrar of Companies, submitting Form MSC-3 (Annual Return), and paying the prescribed fee.

Can a dormant company be closed?

Yes, a dormant company can apply for voluntary closure if it has not been reactivated within five consecutive financial years or if the promoters decide to wind up the business.

How to close a Dormant Company in India?

To close a dormant company in India, the company must follow the voluntary winding-up process under the Companies Act 2013. This involves passing a special resolution, appointing a liquidator, settling all liabilities, and distributing any remaining assets among the shareholders. The company must also file the necessary forms with the Registrar of Companies and obtain approval for the closure.

Sarthak Goyal

Sarthak Goyal is a Chartered Accountant with 10+ years of experience in business process consulting, internal audits, risk management, and Virtual CFO services. He cleared his CA at 21, began his career in a PSU, and went on to establish a successful ₹8 Cr+ e-commerce venture.

He has since advised ₹200–1000 Cr+ companies on streamlining operations, setting up audit frameworks, and financial monitoring. A community builder for finance professionals and an amateur writer, Sarthak blends deep finance expertise with an entrepreneurial spirit and a passion for continuous learning.

Read more

Rize.Start

Hassle free company registration through Razorpay Rize

in just 1,499 + Govt. Fee
With ₹0 hidden charges

Make your business ready to scale. Become an incorporated company through Razorpay Rize.

Made with ❤️ for founders

View our wall of love

Smooth onboarding, seamless incorporation and a wonderful community. Thanks to the #razorpayrize team! #rizeincorporation
Dhaval Trivedi
Basanth Verma
shopeg.in
Exciting news! Incorporation of our company, FoxSell, with Razorpay Rize was extremely smooth and straightforward. We highly recommend them. Thank you Razorpay Rize for making it easy to set up our business in India.
@foxsellapp
#razorpayrize #rizeincorporation
Dhaval Trivedi
Prakhar Shrivastava
foxsell.app
We would recommend Razorpay Rize incorporation services to any founder without a second doubt. The process was beyond efficient and show's razorpay founder's commitment and vision to truly help entrepreneur's and early stage startups to get them incorporated with ease. If you wanna get incorporated, pick them. Thanks for the help Razorpay.

#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
TBS Magazine
Hey, Guys!
We just got incorporated yesterday.
Thanks to Rize team for all the Support.
It was a wonderful experience.
CHEERS 🥂
#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
Nayan Mishra
https://zillout.com/
Smooth onboarding, seamless incorporation and a wonderful community. Thanks to the #razorpayrize team! #rizeincorporation
Dhaval Trivedi
Basanth Verma
shopeg.in
Exciting news! Incorporation of our company, FoxSell, with Razorpay Rize was extremely smooth and straightforward. We highly recommend them. Thank you Razorpay Rize for making it easy to set up our business in India.
@foxsellapp
#razorpayrize #rizeincorporation
Dhaval Trivedi
Prakhar Shrivastava
foxsell.app
We would recommend Razorpay Rize incorporation services to any founder without a second doubt. The process was beyond efficient and show's razorpay founder's commitment and vision to truly help entrepreneur's and early stage startups to get them incorporated with ease. If you wanna get incorporated, pick them. Thanks for the help Razorpay.

#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
TBS Magazine
Hey, Guys!
We just got incorporated yesterday.
Thanks to Rize team for all the Support.
It was a wonderful experience.
CHEERS 🥂
#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
Nayan Mishra
https://zillout.com/