Shelf Corporations - Shell Corporations
A shelf corporation is a corporation created but not utilized until it is sold. Shelf corporations are also known as shelf companies and aged corporations. Shelf corporations are generally purchased long after they are formed for the following reasons:
- To save the time involved in creating a new corporation,
- To create the appearance that the business has been in business for a long period of time,
- To obtain the opportunity to bid on contracts where there is a requirement that bidders must be in business for a minimum period of time, and
- To help the business obtain credit because many lenders will lend only to mature companies.
Most of these reasons are subject to criticism. Notwithstanding, shelf corporations are regularly created and sold to investors.
A shell corporation is a corporation without any active business operations or any significant assets. Shell corporations are commonly used for startups, as a vehicle to raise investor funds, to conduct a hostile takeover, or to go public.