Understanding Shelf Companies

A shelf company which has been created or developed merely for the purpose of being sold to another company is defined as being a shelf company.

We can offer off the shelf companies in:

  • Hong Kong
  • UK
  • Seychelles
  • BVI
  • Marshall Islands
  • Anguilla
  • Dominica
  • Nevis
  • Belize

 

 

At one time shelf companies were a regular feature of onshore and offshore company formation. Over time, however, some of the issues that shelf companies were meant to solve are no longer an issue. However, there are some instances where a shelf company can be a very good solution.

A purchased shelf company has existed for a certain period of time. This gives the illusion that your new business, maybe even only created yesterday, has also existed for a certain period of time. Adding ‘history’ to your new company venture is really one of the main and currently only reasons to rely on a shelf company. Once a shelf company has been purchased one can immediately start operating through that corporate identity.

Sometimes it is necessary to have your company appear that it has been operating longer than it has in reality. After purchasing a shelf company you can apply for corporate credit. Creditors (think of banks offering a loan) are more likely to grant you access to the credit if your company has been in existence for several years as opposed to several days, weeks or months.  Another example of your business benefitting from a shelf company’s longer history would be something like an office equipment supply company or computer supplier. They usually require at least six months of solid company existence to even think of doing business with you.

Sometimes the reason for obtaining a shelf corporation has to do with increasing business. Some government contracts are only open to long standing businesses. And sadly, it’s not just those granting government contracts that look to your companies’ history. Other businesses you may want to interact with are also looking for longevity to justify their business with you.

While it might be the solution to some problems, the purchasing of a shelf company may not be the panacea it seems to be. Creditors may not be fooled by your shelf company’s date of origin. They may ask to see many years’ worth of tax returns to prove your solid financial history. New companies may also lack certain designated numbers. This can include a D-U-N-S® number (important for proving company credit history). Outside of North America there are similarly designated numbers.

You need to carefully consider the options that a shelf company can provide for you before making this important decision. It is important to note however that there are no shortcuts to developing a solid credit history. For this reason, it is not always advisable to utilize a shelf company.