Starting your own business can be very tedious and stressful due to statutory compliance requirements and confusion about the process.
A shelf company is an established but non-active legal business entity. It is a ready-to-operate company that you can instantly get your hands on as you need it, whether you are an offshore business investor or someone who doesn’t want to spend too much time on the process of incorporating a new company.
What is a Shelf Company?
A shelf company is mainly characterised by the fact that a third party has already established it while complying with all incorporation requirements. The goal of establishing a shelf company is to later sell it to individuals who are in a rush to start their business activities officially.
The main selling point of a shelf company is the ease it offers for anyone to start business operations immediately. It comes in handy when third-party equity is needed or when anonymity is preferred. In addition, buying a shelf company lets you completely bypass the registration process.
In Singapore, all companies must be registered with the Accounting and Corporate Regulatory Authority (ACRA). Requirements for registration include a nominal director, a local company secretary, a company constitution, and a shareholder agreement, among others.
Buying a shelf company is a process that takes just a few days. Afterwards, you just need to make amendments to the articles of incorporation as necessary. A shelf company usually comes with a high price, but it’s worth it considering your target market window and the higher credit you can get from financial institutions.
Pricing for a shelf company is mainly determined by its age. This can be as low as S$2,000 and as much as S$10,000 or more. A shelf company left to age is still compliant with legal requirements even without taking on any assets or liabilities. The older the incorporation, the greater the credibility.
By default, a shelf company already has a nominee director, company secretary, and nominee shareholders. The company name and address may be updated. The same is with the directors and shareholders.
Purchase of a shelf company in Singapore is inclusive of Memorandum and Articles of Incorporation, registered address, UEN, GST number, Certificate of Registration, and Business Profile.
A shelf company in Singapore can either be a private limited liability company or a public limited liability company. You should buy one that is tailored to your needs, such as relocation, access to business loans, private-public partnerships, and joint venture agreements.
Process of Buying a Shelf Company in Singapore
Buying a shelf company in Singapore is straightforward, but you should still carry out due diligence. Below is a simple guide to acquiring a shelf company:
Determine Whether a Shelf Company is Advantageous For You
Remember that you or your authorised representative can establish a new company in Singapore, so you should first assess the pros and cons of acquiring a shelf company.
However, an aged shelf company comes with its own advantages. But even if it’s a new one, it would already save you time, allowing you to focus on getting your business running as soon as possible.
Look For a Reliable Business Consultant
Unless you have extensive knowledge of incorporation in Singapore, make it a point to find a professional consultant or a company registration specialist. They can help you in ensuring compliance with all legal requirements down the line.
They should be able to assist you with finding the best deals, conducting background checks, negotiations, and legal compliance post-purchase.
Review the Company’s Profile and Compliance Status
Once you have found a suitable shelf company, make sure to verify it with ACRA. Moreover, it should have your preferred business structure. Also, check its online presence to ascertain if it has a negative reputation.
Even though the shelf company is dormant, it is still required to have Annual General Meetings (AGM), accounting documents, annual returns, financial statements, and corporate tax filings. Therefore, cross-check all documents in relation to these and be sure of their authenticity.
Sign the Sale-purchase Agreement
Negotiate with the owner of the shelf company regarding the price and any assistance he can offer with the transfer of ownership of the company. The owner must explicitly state that no liabilities exist under the shelf company’s name.
Make sure you have thoroughly read the fine print and the devil in the details has been eliminated. Then, have your consultant do a final review before you ink any agreement.
Transfer the Ownership to Your Name
Once the sale is completed, you can finally proceed to assume full ownership of the shelf corporation. If, for some reason, you wish to remain anonymous, there are service providers who will assume the roles of CEO and part-time CFO on your behalf.
Make sure that legal contracts are in place to protect your ownership. You may also opt to have majority ownership of the shares instead. Then, of course, you can have both ownership by name and most of the company’s shares.
Amend the Articles of Incorporation
You can amend the constitution and other essential details, such as directors and shareholders. It is also possible to change the company’s name to a new one while still retaining the structure and existing documents.
Register Updates of the Company
If you have changed the company name, don’t forget to register it as a new company. However, you will be spared the usual long processing time with new registrations. You would still need to submit everything as listed in the statutory requirements, although the good thing is that you have them all in hand by now.
Regardless of the type of changes, you must notify ACRA as part of the compliance process.
Open an Offshore Bank Account
Since the company is yours now, having a corporate bank account in Singapore is better. This is because it is a must for regular and significant financial transactions such as trading and asset management.
If you want a head start and fewer headaches with your new company, consider buying a shelf company.
Getting yourself a shelf company in Singapore is a simple process and can allow you to start conducting business operations in just a few days. It can also help you take advantage of market windows, business financing, low corporate tax rate, and even anonymity.