What is a shelf company

A ‘shelf company’ is a corporation that’s been pre-registered and remains inactive, effectively ‘on the shelf’ until purchased. Opting for a shelf company allows you to acquire an established limited company swiftly, instead of undergoing the formation process traditionally.

For those who require a business entity promptly, acquiring a shelf company offers immediate operational capability. It eliminates the waiting period often associated with the registration processes undertaken by regulatory bodies such as the Australian Securities and Investments Commission (ASIC).

The vendor of a shelf company typically ensures foundational formalities are completed, such as setting up a corporate bank account and infusing the requisite initial capital. It’s important to note that, aside from these initial steps, the entity should not have any financial history, previous transactions, or outstanding obligations.

It’s imperative that comprehensive records of the formation are handed over upon purchase since your accounting responsibilities commence from the original incorporation date, not the acquisition date.

The economics of purchasing a shelf company should be carefully considered. These entities often come at a premium relative to starting a company from scratch. Consequently, buying a ready-made company should present a clear financial advantage or operational necessity that justifies the additional cost.

Who should buy an already established company?

A shelf company may be the optimal choice for entrepreneurs who need to rapidly establish a corporate presence. The ability to transact business immediately upon purchase is a clear advantage for those pressed for time.

Alternatively, if immediacy isn’t a priority, it could be more cost-effective to follow the conventional route of registering a new limited company. The process may take some time, but it allows for a more personalised setup and potentially lower establishment costs.