Balance sheet for a dormant company


R

Richard

Can someone please tell me under what circumstances the following balance
sheet can be made out for a Dormant Company? It is taken from a Companies
House template (Dormant Company Accounts).

Note:

Net Assets need to equal Total Shareholders Fund, (Issued Share Capital).

If a dormant company has to have no transactions then Net Assets have to be
nothing other than £0.

Consequently Issued Share capital has to be nothing other than £0.

Can there be a situation where Net Assets are more than £0?

Can you fill in the last part correctly?

Thanks.
------
Authorised Share Capital: (Number ____ Share____ Type____ value: £____


Called Up Share Capital Not Paid: ........£____

Current Assets: (In bank & in hand): .....£____

Net Assets:
....................................................................£____


Issued Share Capital (Total Shareholders Funds):
(Number ____Share____Type____ Value: £_____)......£____


During the year, the company allotted ____ ordinary shares

with an aggregate nominal value of £____

the consideration received by the company was £____
 
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P

PeterSaxton

Can someone please tell me under what circumstances the following balance
sheet can be made out for a Dormant Company? It is taken from a Companies
House template (Dormant Company Accounts).
It's not a balance sheet that makes a company dormant. It's the
transactions that determine whether it is dormant or not.
Note:

Net Assets need to equal Total Shareholders Fund, (Issued Share Capital).
Why do you say issued share capital? There could be a share premium.
If a dormant company has to have no transactions then Net Assets have to be
nothing other than £0.
A dormant company doesn't have to have no transactions. I posted the
Companies House link that explains what is required for a company to
be dormant.
Consequently Issued Share capital has to be nothing other than £0.
Total rubbish.
Can there be a situation where Net Assets are more than £0?
Yes

Can you fill in the last part correctly?
Yes, if I know what the transactions are.
 
R

Richard

Can someone please tell me under what circumstances the following balance
sheet can be made out for a Dormant Company? It is taken from a Companies
House template (Dormant Company Accounts).
It's not a balance sheet that makes a company dormant. It's the
transactions that determine whether it is dormant or not.
Note:

Net Assets need to equal Total Shareholders Fund, (Issued Share Capital).
Why do you say issued share capital? There could be a share premium.
If a dormant company has to have no transactions then Net Assets have to
be
nothing other than £0.
A dormant company doesn't have to have no transactions. I posted the
Companies House link that explains what is required for a company to
be dormant.
Consequently Issued Share capital has to be nothing other than £0.
Total rubbish.
Can there be a situation where Net Assets are more than £0?
Yes

Can you fill in the last part correctly?
Yes, if I know what the transactions are.

-------

It's a private limited company.

What transactions then make a company dormant or not? Explain in more detail
by examples or whatever.

In "my mind eye" I went to the bank ostensibly to put £10 in representing
payment for the issued shares. That's just in "my minds eye"! In fact, it
was required by the bank that I put in £50 to start the account. That £50
does *not need* to represent shares payment at all. I (or the Company) have
not issued any share certificates. But there is £50 in the bank.

I'd really like to know how you can have other than zero on the assets side
in a dormant company. Teaching moment here.
 
P

Paul Harris

Richard said:
It's a private limited company.

What transactions then make a company dormant or not? Explain in more detail
by examples or whatever.
There is information available from Companies House.

A company is dormant if it has had no 'significant accounting
transactions' during the accounting period. A ‘significant accounting
transaction’ is one which the company should enter in its accounting
records.

The amount paid for shares on the formation of a company and a few costs
that the company may incur in order to keep the company registered at
Companies House do not count as significant accounting transactions

A company can be non-trading in the sense that it isn't doing business.
But it may still have other accounting transactions going through its
books, which means that it is not dormant in a legal sense. A dormant
company must not have any accounting transactions except specific
allowable transactions that can be disregarded,

Disregard:
payment for shares taken by subscribers to the memorandum of
association;
fees paid to the Registrar of Companies for a change of company name,
the re-registration of a company and filing annual returns; and
payment of a civil penalty for late filing of accounts.

Companies may be dormant for various reasons, for example, to protect a
company name, in readiness for a future project, or to hold an asset or
intellectual property. Some flat management companies whose main purpose
is to own the head lease or the freehold of a property choose to become
dormant by setting up a residents' association to deal with any
expenses.

A company can remain dormant for as long as necessary - indefinitely if,
for example, its purpose is just to prevent the name being used by
another company. However, there are expenses associated with keeping a
company on the register. In particular, there is an annual
document-processing fee payable on delivery of an annual return. The fee
is £15 when you submit it electronically, or £30 when you submit it on
paper). While the company is dormant, it must still prepare and submit
various other documents including annual company balance sheets to
Companies House. The company will have to decide how to meet these
expenses and who will run the company and be responsible for ensuring
that it meets all the legal requirements.
 
R

Richard

Paul Harris said:
There is information available from Companies House.

A company is dormant if it has had no 'significant accounting
transactions' during the accounting period. A 'significant accounting
transaction' is one which the company should enter in its accounting
records.

The amount paid for shares on the formation of a company and a few costs
that the company may incur in order to keep the company registered at
Companies House do not count as significant accounting transactions

A company can be non-trading in the sense that it isn't doing business.
But it may still have other accounting transactions going through its
books, which means that it is not dormant in a legal sense. A dormant
company must not have any accounting transactions except specific
allowable transactions that can be disregarded,

Disregard:
payment for shares taken by subscribers to the memorandum of association;
fees paid to the Registrar of Companies for a change of company name, the
re-registration of a company and filing annual returns; and
payment of a civil penalty for late filing of accounts.

Companies may be dormant for various reasons, for example, to protect a
company name, in readiness for a future project, or to hold an asset or
intellectual property. Some flat management companies whose main purpose
is to own the head lease or the freehold of a property choose to become
dormant by setting up a residents' association to deal with any expenses.

A company can remain dormant for as long as necessary - indefinitely if,
for example, its purpose is just to prevent the name being used by another
company. However, there are expenses associated with keeping a company on
the register. In particular, there is an annual document-processing fee
payable on delivery of an annual return. The fee is £15 when you submit it
electronically, or £30 when you submit it on paper). While the company is
dormant, it must still prepare and submit various other documents
including annual company balance sheets to Companies House. The company
will have to decide how to meet these expenses and who will run the
company and be responsible for ensuring that it meets all the legal
requirements.
Hi. Thanks, I now begin to understand this stuff.

http://www.companieshouse.gov.uk/about/pdf/gba10.pdf

I have in fact just been protecting a company name and am still planning
much of the business.

I thought I had three options but now I think I have two.

a) Say that the £50 I put in bank was share monies. I *cannot do this*
because authorised capital is only £10. I cannot say shares were sold at a
premium, because selling shares at a premium is not allowed (I feel sure).

b) Say that I paid in £10 for the share issue which was 10 shares at £1
each. That would mean the other £40 would in the bank would simply be be
disregarded. If it was not disregarded there would be an unbalance beteen
Net Assets and Shareholders Funds:

Authorised Share Capital: (Number:10 - ShareType:Ord - Value: £1


Called Up Share Capital Not Paid: ........£0

Current Assets: (In bank & in hand): .....£10

Net Assets: .......................................................£10


Issued Share Capital (Total Shareholders Funds):
(Number:10 - Share Type: Ord - Value: £1..... .£10

During the year, the company allotted 10 ordinary shares

with an aggregate nominal value of £10

the consideration received by the company was £10

c) Say no monies were paid for shares, disregarding the £50 as a necessary
technical transaction to open up the account:

Authorised Share Capital: (Number:10 - ShareType:Ord - Value: £1


Called Up Share Capital Not Paid: ........£0

Current Assets: (In bank & in hand): .....£0

Net Assets: .......................................................£0

Issued Share Capital (Total Shareholders Funds):
(Number:0 - Share Type: Ord - Value: £1..........£0

There is a fourth option: I terminate my business account.

Anyone have any opinions on what to do here, which fiigure to use, the £0 or
the £10 figures?
 
R

Richard

I said:
There is a fourth option: I terminate my business account.

Anyone have any opinions on what to do here, which fiigure to use, the £0
or the £10 figures?
Actually I do only have two options regarding the balance sheet.

In addition, I may have the option of terminating my bank account, so there
is no bank balance and starting one up again at a later date. Unless
Companies House objects.
 
R

Richard

Disregard:
payment for shares taken by subscribers to the memorandum of association;
One question: Is this exception only allowable IF monies are not deposited
in a bank?
 
P

PeterSaxton

It's not a balance sheet that makes a company dormant. It's the
transactions that determine whether it is dormant or not.



Why do you say issued share capital? There could be a share premium.




A dormant company doesn't have to have no transactions. I posted the
Companies House link that explains what is required for a company to
be dormant.




Total rubbish.




Yes, if I know what the transactions are.

-------

It's a private limited company.

What transactions then make a company dormant or not? Explain in more detail
by examples or whatever.

In "my mind eye" I went to the bank ostensibly to put £10 in representing
payment for the issued shares.  That's just in "my minds eye"! In fact,it
was required by the bank that I put in £50 to start the account. That £50
does *not need* to represent shares payment at all. I (or the Company) have
not issued any share certificates. But there is £50 in the bank.

I'd really like to know how you can have other than zero on the assets side
in a dormant company. Teaching moment here.
Assets - fixed assets, bank balances, petty cash, debtors. A dormant
company is not decided on a balance sheet date it is a period of time.

The only allowed transactions of a dormant company are:

(a) payment for shares taken by subscribers to the memorandum of
association;

(b) fees paid to the Registrar of Companies for a change of company
name, the re-registration of a company and filing annual returns; and

(c) payment of a civil penalty for late filing of accounts.
 
R

Richard

Richard said:
One question: Is this exception only allowable IF monies are not deposited
in a bank?
Disregard this.:c)

I know what the problem is with DCA. DCA balance sheet can cope with a
shares transaction which is an allowable transaction. But what it cannot
cope with, unless modified, or funds in bank ignored, is a tranaction that
bought to be allowable. And probably is allowable? That is a technical
depositing of a minimum amount of money in order to open up an account. This
is what cannot be dealt with by the current DCA template. Perhaps it ought
to be modified?

Some has mentioned filing under the Abbreviated Accounts template. I worry
that that makes it look like my company is not dormant and I might suffer
financially because of that. Any opinions on this? Anyone!
 
T

Tim

Some has mentioned filing under the Abbreviated Accounts template.
I worry that that makes it look like my company is not dormant...
But your company is not dormant - several people have already told you
that!!

... Any opinions on this? Anyone!
How many people do you need to tell you
that your company was *not* dormant?
 
R

Richard

Tim said:
But your company is not dormant - several people have already told you
that!!


How many people do you need to tell you
that your company was *not* dormant
It's only not dormant by arging that a deposite of £50 imposed on me by the
bank to open a bank account is not an allowable transaction.

That's the only thing I'm currently seeing what might make my company not
dormant and no-one has sated that this is not an acceptable transaction.

Few actually are good communicators here.
 
T

Tim

It's only not dormant by arging that a deposite of £50 imposed on me
by the bank to open a bank account is not an allowable transaction.

That's the only thing I'm currently seeing what might make my company not
dormant and no-one has sated that this is not an acceptable transaction.
The list of allowed transactions has been given to you already (more than
once).
Creating a £40 Director's Loan is not one of them, is it?
 
T

Tim Woodall

The list of allowed transactions has been given to you already (more than
once).
Creating a £40 Director's Loan is not one of them, is it?
I've not been following this closely but I think I understand what the
OP is asking.

Maybe this is so obvious to everybody else because they have knowledge
that they're not sharing.

Can the OP open this account with 50GBP of his own money that he
gives to the company for safekeeping (note he doesn't lend it to the
company). Is there any difference between that and a dormant company
keeping something unrelated to the company in the company safe for
someone.

It does seem a bit weird to me that he wants to end up with a bank
account with 10GBP in it, but the bank wants a first transaction of
50GBP and there's no way to achieve that without 50GBP going through the
company accounts.

I suppose the two solutions are 1) Put the 10GBP in a safe and don't
open an account at all. 2) find a different bank that lets you open an
account with 10GBP.

Or does the account even need to start as a company account? Can he open
it with the 50GBP, withdraw the 50GBP and then draw a line and say
"company accounts start here" and pay in the 10GBP?

I've had no experience of company accounts. I've only ever worked as a
sole trader. And there I only had one bank account. I did have two
credit cards, one I used for business and one for private use but that
was purely as a convenience for myself and made it easier to do my
accounts and tax return.

Tim.
 
P

Paul Harris

Richard said:
One question: Is this exception only allowable IF monies are not deposited
in a bank?
You seem to be still confused about what makes a company dormant as
opposed to one that is trading. If you trade at all during the period
from one set of accounts to the next it is not dormant, if you do
anything outside of the allowable transactions it is not dormant. If it
is dormant now and all you do is within the allowable transactions it
can remain dormant.

For example an allowable transaction would be payment for shares taken
by subscribers to the memorandum of association

So in this case dormant is not a situation in which absolutely nothing
can happen, just that there is a short list of what is allowable and one
of those items is accepting a payment for shares.

So were you to allocate shares and these were subscribed the money paid
is an allowable transaction and is disregarded. You simply allocate the
shares and take the £50 in payment for the shares and deposit it in the
Bank - job done.
 
R

Richard

Tim said:
The list of allowed transactions has been given to you already (more than
once).
Creating a £40 Director's Loan is not one of them, is it?
Correct. I am technically a dormant company because £40 of the monies I put
in is not on the list of exemption.
 
R

Richard

Tim Woodall said:
I've not been following this closely but I think I understand what the
OP is asking.

Maybe this is so obvious to everybody else because they have knowledge
that they're not sharing.

Can the OP open this account with 50GBP of his own money that he
gives to the company for safekeeping (note he doesn't lend it to the
company). Is there any difference between that and a dormant company
keeping something unrelated to the company in the company safe for
someone.

It does seem a bit weird to me that he wants to end up with a bank
account with 10GBP in it, but the bank wants a first transaction of
50GBP and there's no way to achieve that without 50GBP going through the
company accounts.

I suppose the two solutions are 1) Put the 10GBP in a safe and don't
open an account at all. 2) find a different bank that lets you open an
account with 10GBP.

Or does the account even need to start as a company account? Can he open
it with the 50GBP, withdraw the 50GBP and then draw a line and say
"company accounts start here" and pay in the 10GBP?

I've had no experience of company accounts. I've only ever worked as a
sole trader. And there I only had one bank account. I did have two
credit cards, one I used for business and one for private use but that
was purely as a convenience for myself and made it easier to do my
accounts and tax return.

Tim.
Well, I've done what Companies House said. Because there is £50 in the bank
and only £10 of that can be share capital, I've had a transaction not listed
as an exemption. So, I cannot be a dormant company in a legal sense.
Besides, and perhaps this is as much an issue as anything, the Dormant
Company Accounts template cannot handle that extra £40. So, another form of
account must be used.

Ive filed under Abbreviated Accounts and treated the £40 as part of
"Provision for liabilities and charges". For the year ending 30 June 2009
the Company was entiteled from exemption from audit. The members
of the Company have not required an audit.

So, I think I'm pretty much, for all practical purposes, as a dormant
company.
 
R

Richard

Paul Harris said:
You seem to be still confused about what makes a company dormant as
opposed to one that is trading. If you trade at all during the period
from one set of accounts to the next it is not dormant, if you do anything
outside of the allowable transactions it is not dormant. If it is dormant
now and all you do is within the allowable transactions it can remain
dormant.

For example an allowable transaction would be payment for shares taken by
subscribers to the memorandum of association

So in this case dormant is not a situation in which absolutely nothing can
happen, just that there is a short list of what is allowable and one of
those items is accepting a payment for shares.

So were you to allocate shares and these were subscribed the money paid is
an allowable transaction and is disregarded. You simply allocate the
shares and take the £50 in payment for the shares and deposit it in the
Bank - job done.
The problem I created for myself, is that I went and stated authorised share
capital was £10. Then I found out the bank would only open an a/c with £50.
Also, I don't think I needed to open a bank account!
 
P

Paul Harris

Richard said:
The problem I created for myself, is that I went and stated authorised share
capital was £10. Then I found out the bank would only open an a/c with £50.
Also, I don't think I needed to open a bank account!
In exchange for fifty pounds you can issue shares with a nominal value
of ten pounds and the remaining forty pounds could be recorded in the
share premium account if the shares are considered to have been issued
at a premium.
 
R

Richard

Richard said:
Hi. Thanks, I now begin to understand this stuff.

http://www.companieshouse.gov.uk/about/pdf/gba10.pdf

I have in fact just been protecting a company name and am still planning
much of the business.

I thought I had three options but now I think I have two.

a) Say that the £50 I put in bank was share monies. I *cannot do this*
because authorised capital is only £10. I cannot say shares were sold at a
premium, because selling shares at a premium is not allowed (I feel sure).

b) Say that I paid in £10 for the share issue which was 10 shares at £1
each. That would mean the other £40 would in the bank would simply be be
disregarded. If it was not disregarded there would be an unbalance beteen
Net Assets and Shareholders Funds:

Authorised Share Capital: (Number:10 - ShareType:Ord - Value: £1


Called Up Share Capital Not Paid: ........£0

Current Assets: (In bank & in hand): .....£10

Net Assets: .......................................................£10


Issued Share Capital (Total Shareholders Funds):
(Number:10 - Share Type: Ord - Value: £1..... .£10

During the year, the company allotted 10 ordinary shares

with an aggregate nominal value of £10

the consideration received by the company was £10

c) Say no monies were paid for shares, disregarding the £50 as a necessary
technical transaction to open up the account:

Authorised Share Capital: (Number:10 - ShareType:Ord - Value: £1


Called Up Share Capital Not Paid: ........£0

Current Assets: (In bank & in hand): .....£0

Net Assets: .......................................................£0

Issued Share Capital (Total Shareholders Funds):
(Number:0 - Share Type: Ord - Value: £1..........£0

There is a fourth option: I terminate my business account.

Anyone have any opinions on what to do here, which fiigure to use, the £0
or the £10 figures?
For the sake of correctness: Dormant Company Accounts *cannot* have a
balance of £0.

Issued Share Capital is taken as what has been agreed to be taken, recorded
in Memorandum of Association.

Therefore, where no monies has been paid for shares, thus no monies in bank,
Called Up Shares Not Paid has to be recorded with a figure that matches
Issued Share Capital, even if Shares were not called for. Unless this is so,
there cannot be a balance where shares have not been paid for.
 
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P

PeterSaxton

It's only not dormant by arging that a deposite of £50 imposed on me bythe
bank to open a bank account is not an allowable transaction.

That's the only thing I'm currently seeing what might make my company not
dormant and no-one has sated that this is not an acceptable transaction.

Few actually are good communicators here.
You are not a good reader. We have explained several times that your
company is not dormant but you seem unable to take it on board.
 

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