BusinessCompany NewsRedundant subsidiaries cost UK plc £1.2bn

Redundant subsidiaries cost UK plc £1.2bn

One fifth of incorporated companies and subsidiaries in the UK lie dormant and add no business value, says PricewaterhouseCoopers

Link: UK plc still unready for IAS ‘watershed’

Estimates by the firm put the total cost of maintaining the 320,000 redundant surplus companies in the UK at £1.2bn, or £4,000 a year, per company.

PwC found that maintaining these companies was wasteful in terms of management time and the financial cost of compliance, such as the filing of accounts.

Businesses are advised to consider the benefits of corporate simplification, resulting in increased transparency and reduced possibility of corporate governance failure.

Richard Setchim, partner at PwC, said be worse than the figures suggested: ‘When we are called in to investigate an organisation’s structure, we often uncover many more surplus subsidiaries than management expect or, in some cases, even knew about. These include subsidiaries lying completely dormant and parts of the business which are adding no value to their parent firm.

‘Simplifying the corporate structure not only leads to leaner and more transparent companies, it also helps return valuable capital to shareholders.’

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