Dormant Company Management

Dormant company management – or 5-year management

If you run a closely held company and are considering closing or selling your business, it may be worth exploring the option of converting your company into a holding company.

By allowing the company to remain dormant for five years without conducting any business activity, the status of your shares changes from qualified to non-qualified. This offers a significant tax advantage, as the sale of non-qualified shares is taxed at 25%, compared to the much higher tax rate that applies to qualified shares.

Even though your company is dormant, you can still make your capital work for you by investing it during this period. For this, you need to sign a discretionary management agreement with an external asset manager, such as Kavaljer. Together, we will establish guidelines on how to best manage your capital while the company is dormant.

To ensure everything is done legally and correctly, we recommend consulting an expert in this area. We can assist by referring you to experienced accounting firms and legal advisors who can provide guidance and advice throughout the process.

With our extensive experience in managing holding companies, we can help you maximize the potential of your capital during the dormant period. Don’t hesitate to contact us if you’d like to learn more about how we can support you throughout the entire process.