Shelf Company / Shelf Companies Explained
07 Apr 2011 | Category: uncategorized | Author: admin
Definition: A shelf company is a company which has been created but has ceased trading. Its memorandum and articles can be bought 'off the shelf'.
source: ANZ Bank Financial Dictionary
Back in the 'good old days', it took quite a while to create (or incorporate) a company. Yet, people often needed a new company ASAP, so providers of company registration services would pre-create companies and have them 'sitting on the shelf', ready for sale when required.
Someone wanting to create a company fast could buy one of these off-the-shelf companies (or shelf companies as they are more commonly termed) quickly and easily. All that was required for a buyer to purchase a shelf company was for the provider to transfer the shelf company's shares to the buyer, and arrange for the resignation of the directors of the original shelf company, who would be replaced by the new directors (the purchaser or their nominated agent/s). Sometimes, the shelf company name would also be changed by the buyer.
With the advent of high-tech company registration services such as Cleardocs, it's no longer necessary to wait long time periods to create a new company, so the shelf company business has died down considerably. It also means that there is less administrative hassle and expense in the creation of a new company (compared to purchasing a shelf company) because you don't need to change directors, possibly change the name of the company, transfer shares and pay stamp duty on the shares tranfer.
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