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Shelf companies are a legal entity that is created and operational but remains dormant until a time where the buyer purchases the shelf company to do business. This company is acquired by such directors who don’t wish to go through the entire process of company formation. In this article, we shall discuss more about this company.
Table of Contents
Shelf Companies are incorporated with a resident company secretary, a nominal director, and a single shareholder with one share. These companies can be bought by foreigners as foreign shareholders can hold 100% of the company’s shares. Upon purchase, the company can be immediately operational.
For a foreign entrepreneur, Singapore is a great place to invest. Foreign investors can buy an already existing company or set up a new company. The decision depends upon the intent of the investors.
The benefits of buying this kind of company is given below-
Setting up of a new company requires incorporation of the company with accounting and corporate regulatory authority. It includes arranging a director and a qualified secretary resident in Singapore. Further, a local Singapore address and a Sing Pass or Corp Pass ID may be required.
When you buy a shelf company, you can bypass the registration process for the incorporation of a new company. You can start operations immediately.
The incorporation of a new company includes preparing documents like shareholder’s agreement, company constitution etc. Since the documents required are prepared upon already during the company’s incorporation therefore, you are only required to amend them to suit them to your needs. The process is not long. As a result, you can obtain a fully operational company and can company with requirements for bidding or entering into a contractual relationship with other parties quicker.
Shelf companies have an established longevity and operating history; therefore it has increased chances of getting loan approved from local banks and potential investments. It is due to the fact that businesses and individual feel more confident while dealing with companies that have been incorporated since long time.
Incorporation of a new company takes some time. You may be required to go through the entire process and there are certain post incorporation compliances as well that needs to be followed. If you are planning to start business with immediate effect, Shelf Companies can be the real solution.
Buying process is mentioned below:
The process of buying begins with choosing. Choose the company that you want to buy. For instance if you choose the company based on the date of incorporation then the older the company, the more expensive it would be.
One can choose such company based on its name however, don’t worry if you don’t find a company name which you like. It is because you may change the name of the company later. The seller can also provide the name changing service free of cost.
Companies sell shelf companies with additional services provision. There are companies that do that. You may negotiate with the seller for including more value added services. As stated earlier, some sellers provide name change of the company at no charge at all. Some offer assistance with opening a Singapore bank account. During negotiations, sellers want to be sure that there are no debts or liabilities incurred by the company in question.
Contract for sale shall be drafted in order to transfer the ownership of the company from its existing owner to the buyer. Once the contract is signed, the shares in the company will be transferred to the buyer or to the appointed persons. The new shareholder shall then be the new owner of such company.
As stated at the start of this article, when this Company is dormant, the seller who is the original owner of the company should strictly comply with the statutory requirements in order for the company to be operational immediately. As a buyer, when you buy the company, you must also abide by the same obligations. Below we have discussed the obligations or requirements.
The statutory requirements are as follows:
The main features of this type of company are as follows:
The cost of shelf companies in Singapore may range from 2,500 dollars To 20,000 dollars included with the sale and the date of its incorporation. It may be noted that old companies tend to more expensive.
The decision of opening new company or buying shelf companies is based on the choice of investor that how he would want to use the entity. In case you seek specialized assistance to come to a conclusion then you may request for the services of Singapore company formation agents who will provide you with information on each type of company thereby helping you in arriving at an informed decision.
There are multiple reasons for you to proceed with buying a Shelf Company in Singapore if you are wising to buy a company abroad. Keep yourself informed about all the necessary information before buying the same. The statutory requirements etc. should be met after you buy the company.
Read our article: Company Incorporation in Singapore: A Comprehensive Guide
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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