What is a Shelf Company?

If you wanted a new company you the agent (or yourself) had to physically go into an ASIC office to lodge the documents and wait for them to be registered. This was a time consuming exercise and yes there were big lines and “take a ticket” to deal with as well.

Now it is much easier to start a corporation and in fact you can have one up and running within hours if you wanted to. You no longer have to use others to help you get started, but it would still be a wise decision to do so because it will be much faster and easier, as these people are professionals with all the information and forms and software directly linked to ASIC to get you started as soon as possible. Not to mention if you don’t complete the forms correctly they can assist you to make sure it is set up right from the beginning.

Like we said shelf companies used to sit on the shelf, waiting for someone to come along who needed them. Then they would be sold and everything would be switched to the new owner. This was actually faster than starting a new corporation so that is why it was so popular. Even though it was faster it was not cheaper and people had to pay more for the corporation and getting everything like the company name and the directors and such changed.

Today the Internet makes it a lot faster to register a corporation and so a lot of people no longer are interested in shelf companies. But there are some reasons you might still want to consider a shelf company if you are looking to get into business relatively quickly.

First of all it is an aged company. This means you are going to have a better chance at getting credit, loans, and investors, just because the company has been around awhile. Another reason is that some jurisdictions in Australia will only allow you to bid on contracts if you have been in business for so long. There may be other restrictions you will have to adhere to as well, so if you are interested in working on a certain project or doing something specific with a new corporation or company, you might want to find out a head of time whether it is worth it or not to purchase a shelf company or to go for your own corporation.

Although shelf companies used to be in demand much more than they are today, there are still some good reasons to check them out before you start your own business. While it might be more expensive to purchase a shelf company you might find the longer in business the company is the better chances you have of seeing quicker results. Take all of this into consideration with your financial and legal advisers before you decide how to become incorporated.

Before the Internet came along it was a lot more difficult to start a corporation. It took a lot more time and it was even more costly. Because of this there were companies that would make up and register corporations that would then sit on the shelf so to speak so that when a customer needed a corporation as soon as possible there was something available for them.