What is a dormant company?

A company is dormant during a period in which no significant accounting transaction occurs, that is, no transaction which is required by CA 1985 sec221 to be entered in the company's accounting records, and a company ceases to be dormant on the occurrence of such a transaction: CA 1985, sec250(3). Any transaction arising from a subscriber taking the shares in the company s/he has agreed to take under the memorandum is disregarded.

A dormant company may pass a special resolution exempting itself from the auditing requirements of the Act: CA 1985, sec250 (1).

A company may be kept dormant indefinitely provided the statutory requirements for the registration of annual accounts and returns are complied with. This is useful in a number of circumstances, e.g. to protect a distinctive name from registration by others and for the smaller kind of property management company.

Incorporation Services Limited provides an expert service for all your company formation and company law requirements. We can register and keep a dormant company for you. This is quite often done as a way of protecting the name from registration by someone else.

Related topics

• How can a company's name be protected?
• Must a company keep accounts?