Many business leaders believe that their current corporate structure contains dormant or inactive companies that are a drain on finances and that their organisations would benefit from simplification, according to a survey released today by leading business law firm Mason Hayes & Curran LLP (MH&C LLP).

Over 100 participants in a webinar hosted last week by M H &C LLP were surveyed, with 61% stating that their corporate structure would benefit from simplification. 

Efficiencies

“The global economy is being severely impacted by the effects of COVID-19. To ensure long-term protection and sustainability, organisations are likely to be considering ways to reduce costs and improve business efficiencies.

“Simplifying your corporate structure by removing dormant or unnecessary companies is a way to achieve both of these objectives,” corporate governance partner Claire Lord said.

“There are many other benefits of a leaner corporate structure as well. With an increasing focus on the detection of corporate fraud, a more simplified structure can help mitigate risk and improve transparency and governance.”

Cost of dormant companies

Businesses may also underestimate the cost of maintaining a dormant company, with 57% of respondents to the survey believing that the average cost of maintaining inactive companies is €4,000 or less per year.

In reality, including all of the relevant factors, the average cost of maintaining a dormant company is closer to €8,000. 

MH&C LLP has compiled a Corporate Simplification Guide.