What Does Non-Trading Company Mean? Definition & Meaning for Dormant Company
. The term dormant applies to a company that, in legal terms, has no significant accounting transactions during a financial year. It is not the same as a non-trading company, a term that has no legal meaning. No significant accounting transactions means no entries in the company's accounting records. The amount paid for shares when the company is first formed and a few costs that the company may incur in order to keep the company registered at Companies House do not count as significant accounting transactions. A company can be non-trading in the sense that it is not doing business. However, it may still have other accounting transactions going through its books, which means that it is not dormant in a legal sense. A dormant company must not have any accounting transactions except specific allowable transactions that can be disregarded. Dormant or Non-Trading - as the company is non-trading, it is required to file Dormant Accounts annually to Companies House. Dormant accounts show very little financial data except for assets and shares held. If the company becomes active again, it will be required to file normal Annual Accounts again. Due to the lack of financial data, a dormant company will not be assigned a credit score or limit, also there will be little company information.
Financial transactions that do not affect the submitting of dormant company accounts are: payment for shares taken by subscribers to the memorandum of association, fees paid for a change of company name, the re-registration of a company and filing of annual returns and payment made because of penalties incurred due to late filing. Dormant company accounts do not have to include a profit and loss account and can be very brief, particularly if the company has been dormant since incorporation. If the company has not traded since incorporation, then form DCA can be used to submit the dormant company accounts.
Allow us to help you register your company and get it running, to select the best business for incorporation, or to incorporate your company with the Companies House. Same day companies formation for £32.00. Company formations usually completed in 4-6 hours using Companies House online company formation services. Our methods rely heavily on information-searches made by electronic means, either from local disks and servers, or from specialised, restricted-access websites. Apart from reducing the clutter, this approach has been shown to yield substantially faster and more accurate results, not only providing a superior service to traditional law-book based approaches, but also significant savings which we try to pass on to our clients. We supply expert advice in navigating English legal and business systems helping you set up in England, Scotland, Northern Ireland and/or the Republic of Ireland. Coddan can hold your company with a dormant status for a very competitive fee of £120.00. Our fee includes the passing of appropriate resolutions, preparation and filing of the DCA forms with the Companies House and notification to the Inland Revenue about Dormancy of the company. Let us know how we can help.
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Further information
Companies can be dormant for various reasons, often to protect a company name, in readiness for a future project, or to hold an asset or intellectual property. Some flat management companies whose main purpose is to own the head lease or the freehold of a property choose to become dormant by setting up a residents' association to deal with any expenses. A company can remain dormant for as long as necessary - indefinitely if, for example, its purpose it just to prevent the name being used by another company. However, there are expenses associated with keeping a company on the register. And, while the company is dormant, various other documents and annual company balance sheets must still be prepared and filed at Companies House. The company will have to decide how expenses will be met and who will run the company and be responsible for ensuring that all the legal requirements are met.
Although a company may be dormant, Companies House must still keep up-to-date information about it on record and make this available to anyone who wants to know about the company. Basically, Companies House needs to know: where to contact the company. The company's official address is known as its registered office. Who runs the company? That is, particulars about the company officers. Who owns shares in the company - the shareholders (if the company has them). Where certain company registers are kept. What the company's financial year-end is. The company's financial year-end is known as its accounting reference date. What the company's assets and liabilities is - its annual balance sheet. What rules govern the company - its Memorandum and Articles of Association.
Most of this information is registered at Companies House when the company is first formed and, if anything changes, you will need to tell Companies House, usually on a special Form. However, every year Companies House will send to the company's registered office a summary of the information held on the public record at Companies House - this Form is called an Annual Return (Form 363s). This must be completed and returned to Companies House. Also, every year, the company must prepare a balance sheet and send that to Companies House.
The nominal value of the share normally fixes the amount which the shareholder is required to contribute to the assets of the company. One of the results of the doctrine of separate personality is that members of a corporation are not personally liable for corporate debts unless they agree to such liability.
In the case of companies registered under the Companies Acts, they are only granted the privilege of incorporation on the basis of their members accepting a limited degree of liability for corporate debts. Section 1(2) of the Companies Act 1985 provides that members' liability is limited to the amount (if any) remaining unpaid on their shares. Shareholders must pay at least the full nominal value of any shares issued to them (i.e., shares must not be issued at a discount s.100). Where, however, the company issues shares at a premium, i.e., at more than the nominal value of the shares, as is quite common, then the holders of those shares will be liable to pay the amount owed, over and above the nominal value. The excess will still form part of the company's capital but will be included in a distinct share premium account (s.130) and may only be used for limited purposes.
Do you consider there is still a need for the dormant company provisions in Section 250 of the Companies Act 1985. Number of respondents focused on the case of dormant subsidiaries of large groups, who would otherwise be required to file audited accounts. The need to protect company and brand names was also raised here. Do you consider that we should remove the requirement for dormant companies to pass a special resolution in order to gain audit exemption? Do you agree that 10% or more of shareholders should be able to demand an audit? Does the requirement for dormant companies to file annual accounts represent fair and proportionate regulation for these companies? Should certain specified payments to Companies House be excluded from the definition of a
significant accounting transaction for the purposes of assessing whether dormant status applies? Do you have any views on dormant agent companies?
This is our most popular package with UK residents, and includes: The submission of forms detailing your company's executive officers The registration of your £1,000 authorised share capital (a minimum of one share must be issued) Company formation is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees The appointment of your own candidates as directors and secretary (a minimum of two people are required) The following documents will be e-mailed to you (Note: these documents are to be printed and signed): Electronic Certificate of Incorporation (PDF) Electronic Memorandum & Articles of Association (MS Word) Minutes of the First Meeting of Directors (MS Word) Share Certificates and company Register
Economy Package
£ 82.00
Annual Maintenance Fee £50.00
This is our most popular package with EU residents, and includes: The submission of forms detailing your company's executive officers The registration of your £1,000 authorised share capital (a minimum of one share must be issued) Company registration is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees The appointment of your own candidates as directors and secretary (a minimum of two people are required) A registered office address for 12 months, provided by Coddan An application form for the following year's renewal of the Registered Office Address service (£50.00) Annual Return and Annual Account reminder The following documents will be e-mailed to you (Note: these documents are to be printed and signed): Electronic Certificate of Incorporation (PDF) Electronic Memorandum & Articles of Association (MS Word) Minutes of the First Meeting of Directors (MS Word) Share Certificates and company Register
Premier Package
£ 131.95
Annual Maintenance Fee £99.95
This is our most popular package with small business, and includes: The submission of forms detailing your company's executive director The registration of your £1,000 authorised share capital (a minimum of one share must be issued) Company incorporation is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees Applicant appointment of director for company (appointed electronically) A registered office address for 12 months, provided by Coddan An application form for the following year's renewal of the Registered Office Address service (£50.00) Nominee company secretary service for 12 months (next year - £49.95) Annual Return and Annual Account reminder The following documents will be posted to you (these documents will be sent via Royal Mail): The original laminated Certificate of Incorporation A bound copy of the Memorandum and Articles of Association The Minutes of the First Directors' Meeting Two printed share certificates and Company Register
Deluxe Package
£ 256.95
Annual Maintenance Fee £224.95
This is our most popular package with overseas residents, and includes: The filing and registration of your company in England The registration of your £1,000 authorized share capital (a minimum of one share must be issued) Company formation is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees A registered office address for 12 months, provided by Coddan An application form for the following year's renewal of the Registered Office Address service (£50.00) Nominee Company secretarial service for 12 months (next year - £49.95) Coddan provides a company nominee director service for 1 year (next year - £125.00) The name of the nominee director & secretary will appear as a public record Annual Return and Annual Account reminder The following documents will be posted to you (these documents will be sent via Royal Mail): The original laminated Certificate of Incorporation A bound copy of the Memorandum and Articles of Association The Minutes of the First Directors' Meeting Two printed share certificates and Company' Register A pre-signed, undated letter of resignation from the nominee director A General Power of Attorney signed by nominee director An indemnity Letter for General Power of Attorney A nominee service agreement which provides for the indemnification of the nominees
Name Protection
£ 22.00
Annual Maintenance Fee £60.00
The purpose of this package: This package allows you to register a company name with Companies House and thus prevent this name being used to form a company by anyone else This package includes: The registration of a non-trading limited company with your choice of name Payment of UK legal and initiation fees A nominee director A nominee secretary A nominee shareholder A registered office address Management of the company: Coddan will file the annual return and dormant company accounts on your behalf for an annual fee of £60.00 If you do not wish to renew the management option at the end of term, the company will be dissolved
Business Start-Up: Legal Requirements
Company subscribers may be residents outside the UK You must appoint a minimum of ONE Director There is no maximum number of Directors Directors can be corporate bodies or private individuals A Director can be of any nationality Directors need not be formally trained All companies must appoint a company Secretary Secretaries can be corporate bodies or private individuals A Secretary can be of any nationality. If there is only ONE Director he or she CANNOT also be the Secretary A company must have a minimum of one shareholder who may be a corporate body or an individual No minimum paid up share capital A minimum of one share may be issued Capital may be denominated in any currency Shareholders and directors meetings may take place outside Great Britain The company is required to have a registered office in the UK
Every company is required by law to complete and file annual accounts in a format which is acceptable to Companies House. Even companies that have not traded must still file a balance sheet. There are automatic penalties for the late filing of accounts and directors can be prosecuted. If your company has traded we suggest that you contact us to prepare and file your accounts.
The provisions extend qualifying company status to a non-trading company where an individual is an employee or officer, provided that s/he does not have a material interest in the company or in a company that controls it. Similar provisions apply to shares held in the holding company of a non-trading group. Companies can be dormant for various reasons, often to protect a company name, in readiness for a future project, or to hold an asset or intellectual property.
Suggested Reading
Dormant Companies & Audit Exemption: The statutory instrument also sees the repeal of section 250 Companies Act 1985 requiring a dormant company to pass a special resolution to qualify for exemption from audit. This section is replaced by section 249AA. A dormant company will now qualify automatically, provided 10% of members do not request an audit. If the company is a banking or insurance company or an authorised person for the purposes of the Financial Services Act 1986, the dormant company audit exemption provisions do not apply.
There has been a small amendment to the meaning of "significant accounting transactions" such that a transaction arising from the taking of shares in the company by a subscriber to the memorandum and the payment of the following fees to the registrar are not significant accounting transactions and will not result in the loss of dormant company status: fee for change of name under section 28, fee on re-registration of a company, a penalty under section 242A (failure to deliver accounts) and annual return fee.
Where a company claims to be dormant for a financial year and has acted as agent for any person during that year this fact must be disclosed in the notes to the accounts. It is Important that consideration is given to Communicating the change in the audit threshold to clients so that they can make an informed decision from the options that are available to them. It is not necessarily appropriate to assume that all companies that will qualify for audit exemption will wish to take exemption or that it is beneficial for all these Companies to take exemption.
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WHAT IS DORMANT A COMPANY?
The term "dormant" applies to a UK limited company that, in legal terms, has "no significant accounting transactions" during a financial year. It is not the same as a "non-trading company", a term that has no legal meaning. No significant accounting transactions means no entries in the company's accounting records. The amount paid for shares when the company is first formed and a few costs that the company may incur in order to keep the company registered at Companies House do not count as significant accounting transactions.
A dormant company will now qualify automatically, provided 10% of members do not request an audit. If the company is a banking or insurance company or an authorised person for the purposes of the Financial Services Act 1986, the dormant company audit exemption provisions do not apply.
WHAT IS THE DIFFERENCE BETWEEN A NON-TRADING COMPANY ∓ A DORMANT COMPANY?
A company can be non-trading in the sense that it isn't doing business. But it may still have other accounting transactions going through its books, which means that it is not dormant in a legal sense. A dormant company must not have any accounting transactions except specific allowable transactions that can be disregarded.
WHY HAVE A DORMANT COMPANY?
Companies can be dormant for various reasons, often to protect a company name, in readiness for a future project, or to hold an asset or intellectual property. Some flat management companies whose main purpose is to own the head lease or the freehold of a property choose to become dormant by setting up a residents' association to deal with any expenses. A company can remain dormant for as long as necessary - indefinitely if, for example, its purpose it just to prevent the name being used by another company.
However, there are expenses associated with keeping a company on the register. And, while the company is dormant, various other documents and annual company balance sheets must still be prepared and filed at Companies House. The company will have to decide how expenses will be met and who will run the company and be responsible for ensuring that all the legal requirements are met.
WHO RUNS A DORMANT COMPANY?
If it is to remain dormant, a company cannot have paid employees because their wages would have to be recorded in the accounting records. However, all companies, including those that are dormant, must have: at least one director for a private company (two directors for a public company); and a company secretary.
WHAT RESPONSIBILITIES DO THE OFFICERS OF A DORMANT COMPANY HAVE?
The responsibilities of a dormant company's officers are the same as for those of a trading company. The directors and secretary manage the company on behalf of the shareholders or members. Among other things, they are responsible for holding meetings and ensuring that all the necessary returns, accounts and other documents reach Companies House by the due date.
WHAT HAPPENS IF DOCUMENTS ARE NOT DELIVERED TO COMPANIES HOUSE?
The company's officers could be prosecuted because they are personally responsible for ensuring that documents are delivered on time. Failing to do so is a criminal offence. In addition, there will always be an automatic civil penalty for filing accounts late. Companies House could also reasonably assume that the company is no longer required and strike it from the register. If a company is struck off the register, it ceases to exist and its assets become Crown property.
WHAT IF THE COMPANY IS NO LONGER REQUIRED?
If you decide that you do not need your dormant company, you can arrange to have it struck off the register. There are two ways of doing this: if the company has no debts or other liabilities, you may be able to apply for 'voluntary striking-off and dissolution' without going through formal insolvency proceedings; or if the company has affairs to wind up, then the company can be put into "voluntary liquidation".
DORMANT COMPANIES AND UNITED KINGDOM COMPANIES HOUSE
Although a company may be dormant, Companies House must still keep up-to-date information about it on record and make this available to a
U.K. Limited Companies
Non-Trading Company
£ 32.00
This is our most popular package with UK residents, and includes:
The submission of forms detailing your company's executive officers
