A Comprehensive Guide about Shelf Companies

Shelf Company

A shelf company is a legal business entity that is duly created and fully operational but has remained dormant since its inception. Also known as a ready-made company or an aged corporation, a shelf company is intentionally put to ‘shelf’ and left to ‘age’, until such a time it is acquired by a specific buyer to be used for its intended purpose.

While a shelf company is considered as inactive and unused, it is vital for the preservation of its status quo to be in strict compliance with all statutory requirements, just in case it needs to start operating immediately. These include the following:

Profile of a Shelf Company

Like other local companies incorporated in Singapore, a shelf company must satisfy all the registration requirements in order to carry on with its business transactions. Its key features include the following:

  • Has local registration as a Private Limited Company
  • Has at least one local resident director (a Singapore Citizen; a Permanent Resident holder; an individual with an Entrepass, Employment Pass, or Dependent Pass status)
  • Has a local resident company secretary appointed within six months of registration
  • Has minimum of one shareholder but not more than fifty shareholders
  • Has more than one local or foreign directors who may or may not be shareholders
  • Foreign individuals or entities can have 100% shareholder rights
  • Has registered address that is a local Singapore address and cannot be a PO Box
  • Has a minimum paid-up capital of S$1

Advantages of a Shelf Company

  1. When a buyer does not want to go through the regular registration process for a new company
  2. When a buyer wants to start business operations right away
  3. When a buyer with foreign business partners wants to merge their existing company history with the Singapore shelf company
  4. When a buyer wants to make certain modifications e.g. company name and business activity
  5. To acquire a mature company with zero liability
  6. To increase the chance of getting loan approval from a local bank
  7. To attract prospective investors and clients with preference for older-established businesses over start-ups and pioneers
  8. To use the shelf company to file for offshore status

Disadvantages of a Shelf Company

  1. It comes with a very high premium because of its ‘mature’ status
  2. Investors are unable to take advantage of the government’s tax benefits that are granted to newly-incorporated companies
  3. Investors lose the privilege of choosing the company structure type at the onset of its registration

Registration of a Shelf Company in Singapore

The registration process for a shelf company in Singapore can be done through the following steps:

  1. Choose the appropriate company structure type
  2. Go through all the details of the agreement with the seller
  3. Sign the contract of purchase
  4. Proceed with the transfer of ownership
  5. Update company’s Articles of Association that is in accordance with the Companies Act
  6. Submit all legal documents to the governing body

Getting Help from Corporate Services Singapore

If you want to establish and register your new business without going through the tedious filing process, contact Corporate Services Singapore for a cost-effective, time-efficient, and hassle-free solution to company formation.

Posted in Company Incorporation.