In India, we know a Shelf Company as an inactive legal firm. And, this firm is already registered under commercial law. Further, it is an existing legal firm that uses the LLC to Corporation with the name. In addition, these firms are usually available for sale because they need a new owner. Moreover, these firms do not have a trading history and they have no fund and debts. In this article, we are going to learn about such Shelf Companies. We will also explain the related features of Shelf Companies. So, let’s start with the details.
What is a Shelf Company?
A shelf company or a shelf corporation is a firm corporation with no record of business in history. Someone might have started this firm in the past but left with no activity or business. Most importantly, the word SHELF is a metaphor that we use for such left firms. Above all, these firms are available to sell to the people or the group of people who want to start a business. But, they don’t want to go through the process of registration to start a new firm.In other words, a Shelf Company is an inactive company by nature. And people can use them for money-related acts or any other use in the future.
On the other hand, these firms are mainly in use by law firms and are legally registered for any kind of financial use. Moreover, we also know these firms as ready-made companies, blank check companies, and aged companies. And, mostly the accounting and law firms buy these firms.
Purchasing a Shelf Company
Shelf companies do not do any business activities. But, these firms are available for sale. And, if someone buys them, the investors will start their business activities at a speed. It is because they avoid the process of registration. In India, buying a shelf company is a good way to start a firm. Meanwhile, people can start their business process in a much lower time frame compared to the usual process of the registry. It is because; these firms are already registered with the local administration. In addition, it takes at least 16 weeks to start a firm in India. But, the process of buying a shelf company will take about 10 days. The time gap is big. So, if the choice is available, then why not go with buying a shelf company. And, if you want to buy a shelf company, specialists will be available to help you with the process.
Incorporating a New Company
In the earlier days, it was a long process to start a new company. But, now it is a very easy and fast process to start a new firm. Therefore, it is now more common to register a new company rather than buying a shelf company. It is also much more efficient and less tricky to set up a new company. And, it allows you to start a firm with new and specific features you need for your company. Let’s check what features you can choose for your new firm.
- New Company Name
- New Business Address Details
- Shareholders
- You can decide the types and numbers of shares for each shareholder
- Allows you to choose a new head and joint secretary for your Firm
In addition, new companies may have new rules. However, you can make changes to the rules of a shelf company. But, they will charge you the extra cost to change their standard rules. Most importantly, if you start a new firm, you will need to pay only the setup cost. And, if you buy a shelf company then you will need to pay both the company and transfer costs. This is the reason the importance of shelf companies is going down. However, shelf companies still exist and you can still buy them from the providers. And, in many cases, some firms refer to themselves as a shelf company provider, but they do not sell shelf companies. They only offer registration services for the new firms.
Why Would Someone Buy a Shelf Company?
There are some common reasons why someone people buy shelf companies. Let’s check.
- It will save the time of the registration process.
- Allows bididng on other projects because many legal firms need such long-term companies
- To make their presence and attract new funds
- Help you gain business profits
- It is beneficial to buy a shelf company
- To start a business right after buying a shelf company
- Help you gain fiscal advantage from banks and investors
- Entering into legal deals with other companies
- To start other firms with being it old
- Making business deeds more simple
What Are the Disadvantages of Buying a Shelf Company?
In the present times, the registration process of new companies is simpler. And, it is cost-effective and faster to start a new firm. It leads to fewer benefits of buying a shelf company. Let’s check the disadvantages of buying a Shelf Company.
- Need to go through the process of transferring the shares of the old firm
- Changing the higher authorities like managers and partners
- Changing the company name
- Registering the new address of the company
- Changing the basic rules of the shelf company to start as a new
Therefore, it is easier to register a new company rather than buying a shelf company. So, before making any decision, you are advised to go through the processes of both companies. Then you can go with the option that is more valuable to you.
To Sum Up
In conclusion, we have well-read that is a Shelf Company and why people buy such firms. Likewise, we have also outlined the gains and drawbacks of buying Shelf companies. In the same vein, we tried to explain all the connected sides of a shelf company. So, we hope that this article makes you learn the meaning and details of such companies. To know more about such comprehensive subjects, keep reading our blog.
