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Why getting it wrong can be better than getting it right: sample decision tree for removing dormant subsidiaries

Group Reorganisations

12 December 2014

Last Friday, we had an unscheduled trip to the hospital when our daughter Coco (who recently turned three) got her finger stuck in the hinge of a door which our other daughter Norah (who will be two next Saturday) was gleefully closing. Ouch. Luckily, no damage was done.

We wouldn’t necessarily suggest this as a model for family life. But sometimes experiencing some pain or discomfort early on – and learning from it – can be better than paying the price of more severe consequences later. Hopefully Coco, at least, has more respect for doors and hinges now.

A similar principle can apply in the context of corporate projects which involve repeated elements, such as removing dormant subsidiaries or putting in place intercompany agreements for transfer pricing. Even if you’re just starting off with a small pilot project, it’s often very valuable to put in place a “good enough” decision tree for the process, right at the outset.

Why is that? Because by trying to follow it, you will find out where it’s wrong, and how it can be improved to suit the specific circumstances of your group or project. And this can give major benefits later on, by streamlining the process, reducing the time and cost of implementation, and reducing the risk of painful errors.

In fact, the benefits can be even greater for actions which are repeated annually or even less frequently. This approach can shorten the learning curve for new team members, and avoid losing valuable know-how.

If you want to see how this can work, you can download a free sample decision tree by clicking the following link. This is for removing dormant UK companies after a due diligence process has been followed. The decision tree would work alongside other template documents such as corporate approvals, checklists and action lists.

Decision Tree - Strike Off

Do you already use tools like this for corporate simplification projects or intercompany agreements? If so, please let us know by emailing us at info@lcnlegal.com. We would be delighted to be able to share your experiences with our other readers.

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Article by
Paul Sutton
LCN Legal Co-Founder

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