A shelf company, sometimes called a shelf or legacy company, is a company that was formed some time ago but was non-operative, i.e. put on the shelf. While a ready-made society shares similar characteristics, the main difference between the two is that the ready-made society has only recently been registered as opposed to a shelf society.
Shelf companies are generally divided into two categories: a new shelf company or a legacy company:
Buying a new shelf company gives you the guarantee that this company is not doing business, is debt free and has a perfectly clear history. The investor can be assured that business operations can begin without the administrative or financial hassles that might have occurred prior to purchase. As a rule, these companies were founded in the past only with the aim of later selling them as a finished company. In this case, the seller can provide a certificate that no trade has taken place and the company is clear of business debts and liabilities;
By acquiring an aging shelf company, you get a previously active company with its trading history and possible liabilities. It is therefore imperative to obtain a letter of confirmation from the seller that all obligations - including debts - prior to purchase are the responsibility of the seller and not the buyer. Aged shelf companies are preferred for commercial and branding purposes.
Advantages of a shelf company takeover
The new shareholders can benefit from various advantages if they prefer to take over an already established company instead of starting a new one. Below are the most common benefits:
This can often be done remotely - in principle, a completed company can also be acquired from abroad - the shareholders do not have to personally participate in the acquisition process. In this case, the buyer will receive a sample power of attorney by e-mail, which must then be signed and notarized and sent back by post. With the power of attorney issued by the power of attorney, new shareholders are registered in the company and all company documents are sent to the acquirer by mail. After that, the bank account can also be opened remotely. This procedure may vary by country and service provider;
Less Time – One of the key benefits is the time saved by purchasing a shelf company. While the average time to start a new business varies greatly from country to country, the average time to start a business globally in 2016 was almost 21 days. The acquisition process is considered to be simple and straightforward. The company can start operations immediately. In addition, all service providers advise on any uncertainties to facilitate the acquisition process;
Can be bought as an entire package - one of the reasons why acquiring a ready-made business takes less time is the fact that the buyer can acquire a fully registered business with VAT and registration numbers, particularly licenses if required, and even a bank account . In addition, the new owner usually receives all the documents and tax returns that were filed with the office before the purchase. While acquiring a shelf company will cost more than opening a new company, this option can be even more cost-effective given the time saved and the opportunity to start making money almost immediately.