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Allow companies to statutorily merge – a fast cheap process to reduce the number of corporate entities

Comment 2nd July 2010

In the UK to get rid of a company, it has to be struck off or merged. But there can be issues re assets, eg small pieces of land and other rights, and issues re people who were employed by the company which cause groups to leave the company as dormant rather than have it struck off or liquidated. Liquidation is also expensive.

Companies are not allowed to statutorily merge in the UK – it is this position which must be scrapped.

in the USA where there are two companies owned eg within the same group, one company can be statutorily merged with the other. All the rights, assets and liabilities of the first company are passed to the second so the two can continue as one company. The first company is simply then deleted as no longer existing. This enables unwanted corporate structures to be efficiently and cheaply done away with , enabling the UK to be more efficient and waste less on administration in contrast to the UK where tens of thousands of dormant and low activity companies continue to file tax returns, computations and accounts (at both HMRC and Companies House) often for decades.

Why does this matter?

Massive amounts of unnecessary administration in the private sector and at public bodies can be saved as allowing statutory mergers will enable the unnecessary non-productive dormant , low activity companies to be quickly and cheaply deleted allowing all to concentrate only on the fewer but productive companies continuing. It will also enable larger productive companies to create more efficient stronger structures easily which will encourage them to do so.


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