A dormant company is a legal entity, typically a corporation or a limited liability company (LLC), that has been registered with the relevant government authority but is not actively trading or engaged in any significant business activity. While the company remains in existence and maintains its legal status, it does not generate revenue, incur expenses, or conduct any operations during a specified period.
Key characteristics of a dormant company include:
No Trading Activity: A dormant company does not engage in any trading or commercial activity. It may hold assets, such as property or investments, but it does not actively use or manage these assets for business purposes.
No Revenue or Expenses: Since a dormant company is not conducting business operations, it does not generate any revenue or incur expenses related to its activities.
Minimal or No Reporting Obligations: Depending on the jurisdiction, dormant companies may have reduced reporting requirements compared to active companies. They may still be required to file certain annual returns or maintain statutory records, but these obligations are often less stringent.
Maintains Legal Status: Despite not being actively trading, a dormant company maintains its legal status as a registered entity. It remains subject to the laws and regulations governing companies in the jurisdiction where it is registered.
Potential Reactivation: A dormant company can be reactivated if it decides to resume trading or engage in business activities. This typically involves notifying the relevant government authorities, updating company records, and fulfilling any regulatory requirements to resume trading.