A shelf corporation, shelf company, or aged corporation, is a company or corporation that has had no activity. It was created and left with no activity - metaphorically put on the "shelf" to "age". The company can then be sold to a person or group of persons who wish to start a company without going through all the procedures of creating a new one.
Common reasons for buying a shelf corporation include:
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To save the time involved in taking the steps to create a new corporation.
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To gain the opportunity to bid on contracts. Some jurisdictions require that a company be in business for a certain length of time to have this ability.
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To create an appearance of corporate longevity, which may boost investor or consumer confidence.
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To gain access to investment capital.
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To gain easier access to corporate credit.
These reasons are open to criticism. Many years ago, it would take months to properly incorporate a business. However, it is now quite easy, at least in, Western Europe the United States, Canada and; Australia to do so. In fact, it can now be done in as little as a couple of hours in some jurisdictions. 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 consortia "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 corporation's board of directors and shareholder profile.
Due to new legislation any person, group or company purchasing a shelf company must comply with the money laundering regulations by supplying due diligence, this can be any 1 of each of the following:
1 x Picture ID
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Passport
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Drivers Licence
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EU Identity Card
1 x Proof of Address
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