Limited Companies

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smurfchops | 18:50 Thu 12th Jul 2018 | Business & Finance
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Why do some people have multiple limited companies with low amounts of money in each??


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Company registration agents set up vast numbers of limited companies, using memoranda and articles of association that cover just about everything that any firm might want possibly to engage in, and then wait for someone to buy a company from them.

So, for example, if I wanted to set up 'Buenchico Bargains Limited', I could approach Dead Quick Registrations Ltd and pay them a small fee for their service. The company that they'd sell me might have been registered as 'Generic Trading (Number 781) Limited' but they'd register the change of name to 'Buenchico Bargains Limited' as part of the deal. (I've actually set up a limited company, in precisely that way, for a very small fee).

So there are vast numbers of registered companies which really exist in name only (with no assets and minimal share capital), just waiting for someone to buy them (and to change the name to meet their requirements).

Other people might want to own several different companies (with most of them 'held in reserve' until such time as they're needed) so that they can quickly separate out trading activities if, say, one part of the operations of an active firm they're running gets into difficulty. They might also want to have 'spare' companies waiting to take over the activities of some of their existing companies if those latter businesses are getting close to having a high enough turnover to start charging VAT (or to have to submit more detailed accounts to Companies House than small companies do).

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