Can a dormant company own shares in another company?

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Hi, guys. My name is Ellis, and I set up a dormant company a while back. An opportunity has come up for me to purchase shares in another company, and rather than have them transferred to me individually, I thought it might be wise to have them transferred into the ownership of my dormant company. Can I do that?

Answers

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A limited company can certainly be set up for the sole purpose of holding shares in other companies. However, it is unlikely that you’ll be able to retain a dormant trading status because the acquisition of shares will be classed as a ‘significant accounting transaction’, and such transactions must be entered into a company’s accounts which will cause it to become active.

Furthermore, if you were to receive any dividends from the shares, your company would cease to be dormant upon receipt of that income. As an alternative, you can set up a non-trading company. This is essentially the same as a dormant company because it does carry on trade in the traditional sense, but it can make certain business purchases and receive dividends.

Before taking any such action, please consult an accountant for professional advice.

a year ago
 

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