All Reasons You Need To Decide If To Go For A Shelf Company

Been wondering what people mean by a shelf company ?

We have the facts and answers spelt out for you. All you’ll need to do at the end of this page is to decide which way to go limited or unlimited ?

Some Food for thought

First, of course, is your liability. You don't have to be making a profit or even make a lot of sales to be sued for product liability, an injury on your premises, or a dispute with a lender or a vendor.

A shelf company can insulate your personal assets beginning on day one of your enterprise, even if a claim is not covered by, or exceeds the limits of your insurance coverage.

"Oh," you may think, "I don't have all that much personal wealth to lose anyway."

Perhaps not, but in a lawsuit, a plaintiff could get a judgment that would be collectible against your future earnings from any source including your sole or partnership business.

You could end up paying half your salary each month for the rest of your working life to satisfy the courts judgment.

Why risk it ?

For the few the few extra dollars it costs to incorporate properly, give yourself some peace of mind in this area so you can focus on the important matters of building your business by limiting your liability.

A shelf company also called an aged corporation is generally a publicly-traded company that files its annual and quarterly reports so that it stays in good standing with the Security and exchange commission or tax authority, but one that it dormant and conducts no business.

It can then be sold to another company that may want to be publicly traded, but doesn't want to pay for the process. The purchasing company then reverse merges into the shelf company and now it is publicly traded and can even do a new stock offering to raise the much needed operating cash.

Off the shelf companies are ones which firms of lawyers/accountants set up (usually with partners at the firm holding the relevant positions) until you come along interested to buy.

The selling firm’s partners will then transfer the share from the company (and therefore ownership) to you, the partners resign as directors and company secretary, and you are instead appointed in their place.

Sellers of a shelf company would often have formed it without any client ordering for it. The company thus sits in inventory or on the shelf awaiting one to come along and purchase it.

You must be careful that someone did not own the shelf company previously because they may have done some bad things with it and you might get the blame for those actions and be faced with having to prove where and when you acquired the aged corporation.

Of course the name of your business would then be severely tainted.

The alternative is to ask a firm of lawyers or accountants to set you up a new company from scratch. This means that you will not get one with any history or which is just about due to submit some accounts.

If you go the off the shelf route ask to buy one which has only recently been set up (so that you have as long a time as possible before the next returns are due for filling at the Registrar of Companies ).

• Saving the time involved in taking the steps to create a new corporation.


• Gaining the opportunity to bid on contracts. Some states require that your company be in business for a certain length of time.


• Creating an appearance of corporate longevity.


• Quicker access to Investment capital.


• Easier access to corporate credit with age of the shelf company.


• You may need to have a company ready to use today.


• The ability to attract and retain the best employees.


• Using corporate and personal income tax rules to your advantage.


• Using your stock instead of cash to make acquisitions.


• Corporate image is enhanced with age.


• Allowing your business to continue despite the death or divorce of a shareholder.


• Other companies will do business with an older company before a brand new one.


• Establishing a history for your business with a shelf company.


• Bidding contracts at times require a certain age to your corporation.


• Obtaining bank loans is easier when you can show you have history, the age is what matters most.


• It might get easier for you to obtain corporate credit cards and leases. For example, some Financial institutions will not lease or give credit to corporations less than 6 months old.

Many years ago, it would take months to properly incorporate a business. However, it is now quite easy, at least in Australia, the US , Canada and Western Europe; to do so. In fact, it can now be done in as little as a couple of hours.

A company might end up "on the shelf" precisely because of a bad business history.

It is also questionable whether a shelf corporation improves access to capital, since creditors and investors look into a company's history as part of pre-investment due diligence.

Finally, for you to seriously consider if to go for a shelf company, ask your self :

• Would it change the TYPE of business you want to do?


• Would it influence the SIZE and SCALE of the business you'd start?


• Would business change whether you START it or BUY it as an existing operation?


• Would a shelf company change the way you plan to GROW your future or existing small business?

Good Luck!

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