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Why Incorporate a Dormant Company?

 

The most common reason why dormant companies are formed is to secure the name and prevent others from using it.

This could be because the name is similar to one which the registrant is currently using or planning to use in the future or because they anticipate that it could hold some value to a third party at some future date.

As the costs of forming a company have fallen in recent years, the attraction to incorporate and maintain dormant companies has risen.

Also, with there being no restrictions on how long a company can remain dormant and few limits on who or how many a person can hold, purchasing and incorporating these entities is not time sensitive.

The statutory filing requirements for a company remain largely the same irrespective or whether it is dormant or otherwise and thus there are costs which have to be borne.

Dormant companies might however be able to take advantage of some exemptions and permissions which may make some of these obligations less arduous.

An obvious example is the much simplified one page DCA form which can be used as a substitution for the normal statutory accounts.

Form a UK Dormant or Trading Company
 
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