What is a Dormant Company

The Definition

A dormant company refers to an entity that has ceased trading, lacks significant accounting transactions and generated no income within a specific timeframe.

At its core, the designation of a dormant company hinges on the absence of substantial commercial activities. This encompasses a spectrum of transactions, including sales, purchases, investments, and expenses, which collectively constitute the operational footprint of an active business entity.

Does dormant company still have obligation on corporate compliances?

Despite its inactive status, a dormant company maintains its legal existence as a registered entity, subject to regulatory oversight and compliance obligations.

In Singapore, compliance requirements for dormant companies include the filing of annual returns with ACRA (within 7 months from financial year end) and corporate income tax returns with IRAS (by 30 November) unless the company has been granted a waiver to file Form C.

Is there a benefit in maintaining a dormant status?

The concept of a dormant company confers several advantages and considerations for businesses navigating the corporate landscape. For entities undergoing temporary periods of inactivity or strategic realignment, dormant status offers a pragmatic solution to preserve their corporate structure and legal entity without the burden of extensive regulatory obligations associated with active trading. This flexibility enables businesses to weather transient challenges or recalibrate their strategies without resorting to dissolution or re-incorporation.

Moreover, dormant status affords businesses the opportunity to safeguard valuable assets, intellectual property, or brand equity during periods of dormancy. By retaining ownership of these assets, dormant companies can position themselves for future endeavours or shield their proprietary rights from potential infringement or dilution. Understanding the nuances and implications of dormant status is essential for businesses seeking to optimize their strategic positioning within the corporate ecosystem.