Claire Lord

The firm surveyed over 100 participants in a webinar last week, with 61 per cent stating that their corporate structure contains dormant or inactive companies that are a drain on finances and would benefit from simplification.

Claire Lord, head of corporate governance, said: “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.

“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.”

The survey findings suggest that businesses may also underestimate the cost of maintaining a dormant company, with 57 per cent of respondents believing that the average cost of maintaining inactive companies is €4,000 or less per year.

Gráinne Garvão, senior associate in corporate governance and compliance, said: “On average, including all of the relevant factors, the average cost of maintaining a dormant company is closer to €8,000.

“The fact that those surveyed believe the average cost to be lower, means that there could be significant savings for organisations that undertake a review of their structure to identify inactive companies.”

Mason Hayes & Curran has published a Corporate Simplification Guide to help organisations assess whether their current structure could be simplified.

Ms Garvão said: “Many of those surveyed cite the lack of internal resources to carry out a review of their structure as a barrier to corporate simplification.

“The Corporate Simplification Guide provides businesses with the tools needed to undertake an initial analysis of their corporate structure in the most efficient way possible, so they can see where potential savings could be made.”