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UK Company Information

What does Dormant mean?

Dormant is a legal term used in the Companies Act to describe non trading companies that have passed a special resolution to file dormant accounts at Companies House. These are much simpler than conventional accounts and are not audited.

A dormant company must not have any accounting transactions except specific allowable transactions that can be disregarded.

The amount paid for shares when the company is first incorporated and costs incurred in the Companies House registration do not count as significant accounting transactions.

What does Non-Trading mean?

The term 'non-trading company' has no legal meaning. A non-trading company has no significant accounting transactions, which simply means no entries in the company's accounting records.

What is the difference between a Non-Trading and Dormant company?

It is possible to be a non trading company that does not take advantage of the legal exemption to file dormant accounts. It does not do business, however may still have other accounting transactions going through its books, which means that it is not dormant in a legal sense.

It can therefore be said that ALL dormant companies are non traders but NOT all non traders are dormant.

Why have a Non-Trading or Dormant company?

The most common reason for coming across non-trading or dormant companies, is that they are simply incorporated to protect a trading style or product name. The shares of these companies are invariably held by a holding company, this is normally the company you should be interested in. Always look at the shareholders of such companies.

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