Shelf corporation
From Biocrawler, the free encyclopedia.
A shelf corporation, also called an aged corporation, is a corporation that has had no activity. It was created and put on the "shelf" to age. This corporation is then later usually sold to someone who would prefer to have a aged corporation rather than a new one.
Common reasons for buying a shelf corporation include:
- 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.
- Access to investment capital.
- Easier access to credit.
These reasons are open to criticism. It is quite easy, at least in the United States, Canada, and Western Europe, to incorporate a business. A corporation might end up "on the shelf" precisely because of a bad business history. It is questionable whether a shelf corporation improves access to capital, since creditors and investors look into a company's history as part of due diligence.
A number of consortiums "produce" and sell shelf corporations, promoting the fact that the new buyer can at the same time have a corporation with a long history, and yet have complete control over the establishment of the corporations board of directors and shareholder profile.
Examples of such consortiums include:
- Business Filings Incorporated (http://www.bizfilings.com/products/shelfcorps.asp)
- Companies Incorporated (http://www.companiesinc.com/agedcompanies.asp)
- Active Filings (http://www.activefilings.com/en/services/shelfcorps.htm)
- Shelf Corps (http://www.click2inc.com/shelf_corp.htm)
