shelf companies
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
11 February 2011
I want to know about aged shelf companies. What is it ?
How to form a shelf company.
How to form a shelf company.
12 February 2011
I hope you are talking about shell companies. A shell company is a company that exists but does not actually do any business or have any assets.
RAMESH KUMAR VERMA
(Expert)
14 February 2011
shelf corporation, shelf company, or aged corporation, is a company or corporation that has had no activity. It was created and left with no activity - metaphorically put on the "shelf" to "age". The company can then be sold to a person or group of persons who wish to start a company without going through all the procedures of creating a new one.
Common reasons for buying a shelf corporation include:
To save the time involved in taking the steps to create a new corporation.
To gain the opportunity to bid on contracts. Some jurisdictions require that a company be in business for a certain length of time to have this ability.
To create an appearance of corporate longevity, which may boost investor or consumer confidence.
To gain access to investment capital.
To gain easier access to corporate credit.
These reasons are open to criticism. Many years ago, it would take months to properly incorporate a business. However, it is now quite easy, at least in Australia, Canada, the United States and Western Europe, to do so. In fact, it can now be done in as little as a couple of hours in some jurisdictions. A corporation might end up "on the shelf" precisely because of a bad business history. It is questionable whether a shelf corporation improves access to capital, since creditors and investors look into a company's history as part of due diligence.
Common reasons for buying a shelf corporation include:
To save the time involved in taking the steps to create a new corporation.
To gain the opportunity to bid on contracts. Some jurisdictions require that a company be in business for a certain length of time to have this ability.
To create an appearance of corporate longevity, which may boost investor or consumer confidence.
To gain access to investment capital.
To gain easier access to corporate credit.
These reasons are open to criticism. Many years ago, it would take months to properly incorporate a business. However, it is now quite easy, at least in Australia, Canada, the United States and Western Europe, to do so. In fact, it can now be done in as little as a couple of hours in some jurisdictions. A corporation might end up "on the shelf" precisely because of a bad business history. It is questionable whether a shelf corporation improves access to capital, since creditors and investors look into a company's history as part of due diligence.
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