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Possible Reason to keep a Dormant company open

What possible reasons are there to keep a non-trading company open

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Long story short, picking up over the financial affairs of a late relative (qualified accountant), they have a non-trading limited company (was once active) and the only value left in it is the issued (and paid up) share capital. I cannot see any point in keeping it open but am going over in my head for any possible reasons as to why I shouldn't close it down. Unfortunately my relative passed away unexpectedly catching all of us out, so no opportunity to probe possible historical uses. 

There is another (trading) company with a similar name that I will be dealing with until we wind it down. The only possible reason I can fathom is that there is a pension scheme that is (or was at some point) possibly connected to both companies, but I don't believe this will be impacted if both companies are shut down.

I must add, both companies were small closed companies with only the Director/Shareholders as employees. The other shareholder is happy for the company to be closed.

Many thanks in advance.

Replies (8)

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By Vaughan Blake1
23rd Jul 2019 16:30

The reasons for keeping a dormant company going are:
1) Means the name is retained.
2) 'Just in case' a company is needed at some point in the future for a new project at short notice.
3) Never quite got round to striking it off.
4) It owns something of value not shown on the balance sheet and will end up being subject to bona vacantia if the company is struck off.

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Replying to Vaughan Blake1:
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By LostinSuspense
23rd Jul 2019 16:42

Vaughan Blake1 wrote:

The reasons for keeping a dormant company going are:
1) Means the name is retained.
not needed
2) 'Just in case' a company is needed at some point in the future for a new project at short notice.
again not needed
3) Never quite got round to striking it off.
most likely reason, my relative was a bit of a hoarder and the most likely reason why it wasn't wound-up
4) It owns something of value not shown on the balance sheet and will end up being subject to bona vacantia if the company is struck off.

this is my worry, but cannot for the life of me think of any other thing of value

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By johnhemming
23rd Jul 2019 16:37

Happens that I was involved in a corporate transaction recently and have found in the middle of that a dormant company that was originally founded by my father. Hence my current thoughts are to keep it on the register for that reason. I may have a use for it in the future, but I don't feel like just having it struck off.

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Replying to johnhemming:
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By LostinSuspense
23rd Jul 2019 16:47

I am one of the Directors (rather worryingly), I remember agreeing to become one as there was a need at a certain time, but was under the impression that I would be removed at a later date.

Yes, my fault for not checking I know, but I had faith in my relative.
Neither I nor the other Director have a need for the company now and the only reason I haven't closed it down is in case something does come out of the woodwork in the future.

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Replying to LostinSuspense:
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By johnhemming
23rd Jul 2019 16:57

You can of course, resign. It strikes me that this is a DS01 at some stage in the near future.

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By Jdopus
24th Jul 2019 09:12

The only thing I can think of that you might have missed are trading losses that you can use for future tax relief if you keep the company open.

If there are none of these, you're confident the company doesn't hold any assets or legal contracts and you have no reason to keep the name I would shut the company down.

The idea of keeping a company open 'just in case' doesn't make sense anymore when a company can be created in the space of a day with Companies House.

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By LostinSuspense
24th Jul 2019 10:47

It was my initial aim to close it down immediately when I took over, but I decided to leave it open until late 2019/early 2020 in case anything came out of the woodwork.

I know there aren't any tax losses in the business and suspect there are no assets connected to it still, there once were rental properties but these I know have been long sold on.

My thinking was more in case there was any other reason (mainly obscure) that could come back to bite me if I did shut it down straight away. The latest accounts and tax return are both filed so that is not an issue.

Thank you for your advice everyone. I think I will plan to start shutting it down towards the end of this year as per my secondary thought.

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By Ian Bee
24th Jul 2019 12:04

I agree with the questioner that you need to be careful with dormant companies as you won't know the full history.

Many years ago I was involved with due diligence for a client and we found that the target company had at some time in the past transferred properties intra group. As was the case in those days this had involved a transfer of the beneficial ownership while legal title stayed with the transferor but they were now dormant. Subsequent to that the dormant companies were struck off the register.

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