WHAT IS A SHELF COMPANY?
There is a degree of confusion regarding the term ‘shelf company’, which means a pre-registered company, rather than one that is yet to be incorporated. The term refers to a company that is sitting on a shelf, ready for a client to purchase it for immediate use.
There are generally two types of shelf company; new or old. There are various terms used to describe these two types of shelf company, such as historic, aged, mature or vintage for the older companies, and new, recent or current for newer companies. While there is no real definition as to what is old and what is new, it is generally accepted that a company incorporated within the last 3 to 6 months, or the current year is new and anything beyond that, is aged.
Many service providers keep a small supply of new companies with a slight premium on the price, as the client will not need to wait for the standard length of time that it would take to incorporate a new company. The justification for the slightly higher price is that the service provider carries a risk that a company might not be sold, and therefore they will be out of pocket for any costs involved with the incorporation of that company, such as Government incorporation fees.
Shelf companies are not necessarily unused companies, for reasons that we will explain, there is often a requirement for a company that has traded, held investments, filed tax returns or entered into contracts. A company that has never traded or done any business of any type, is usually referred to as being ‘clean’. Be sure to make it clear which type of shelf company you require.
While we cannot list all of the advantages to purchasing a shelf company, some of the most common reasons for purchasing a shelf company are:
· ‘aged’ shelf company; older companies give confidence to potential business partners or, clients or customers, who feel more comfortable dealing with an experienced company; some licensed services require a certain length of time in the desired industry; banks sometimes hesitate to open accounts for brand new companies; used, aged companies are of far greater advantage for immigration purposes, which sometimes require a company to have been in business for several years; there are also contractual reasons that require a company perhaps several years old. We have seen requests for 40 plus year old companies from respected clients seeking global expansion. In some cultures, certain years are considered to be lucky for business, so a company incorporated in a specific year may seem more appealing.
· ‘new’ shelf company; instant ability to use the company, which is often a big advantage in jurisdictions where the incorporation process is slow; certainty that the company is ‘clean’ and that there will be no problems with past business, taxes, charges, clients, contractors, creditors etc.
· Shelf companies are already incorporated, which means they already have a registered name, however in most jurisdictions, a company can easily change its name to match your desired name, if available.
Some shelf companies also come with tax file numbers, bank accounts, licenses such as insurance, banking or other specialist services. Although this type of shelf company is rare, they can be a huge advantage if you need a turn-key solution for your business. Very careful due diligence is required from both the seller and purchaser in such cases for their legal protection from any potential harm by way of legal, tax or contractual commitments.
There are many other reasons why you may need a shelf company, or why you may need a company incorporated in a specific year, or just have a desire to purchase a company with the name that you desire. Whatever your requirements are, talk to us today and find out how we can find almost any type of shelf company that you may seek.
SPECIAL: We currently hold several Ready-Made Shelf companies with bank accounts already set up and operating. Pre-existing companies with working bank accounts are very difficult to come by and they do come at a premium cost. Please ask for details as we cannot publish the information to our public web site. Please Contact Us for further details.