Q&As

Does the registration of a charge by way of legal mortgage or a debenture qualify as a significant accounting transaction for the purposes of section 386 of the Companies Act 2006 when assessing whether a company is dormant?

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Published on LexisPSL on 02/07/2020

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • Does the registration of a charge by way of legal mortgage or a debenture qualify as a significant accounting transaction for the purposes of section 386 of the Companies Act 2006 when assessing whether a company is dormant?

Does the registration of a charge by way of legal mortgage or a debenture qualify as a significant accounting transaction for the purposes of section 386 of the Companies Act 2006 when assessing whether a company is dormant?

A company is dormant during any period in which it has had no significant accounting transaction.

A significant accounting transaction is one which the company should enter in its accounting records pursuant to section 386 of the Companies Act 2006 (CA 2006) and does not include:

  1. any transaction arising from the taking of shares in the company by a subscriber to the memorandum of association as a result of an undertaking of theirs in connection with the formation of the company, or

  2. any transaction consisting of the payment of a fee paid to Companies House on a change of the company's name, a fee paid to Companies House on the re-registration of a company, a penalty paid in relation to the late filing of annual accounts under CA 2006, s 453, or a fee paid to Companies House for the registration of a confirmation statement (previously annual return)

There is a distinction between a company that is dormant and a company that is simply not trading. A dormant company will not be trading.

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