By Vlad Cuc, specialist in company formation matters
Shelf companies are legal entities that have been registered and are put on hold until they are sold to entrepreneurs. Shelf companies are also referred to as shell or aged companies. The main reason foreign investors are inclined to purchase a shelf company in Hong Kong is the credibility it offers.
The registration of shelf companies is a simple process because it involves no real registration action on the part of the new owner. Once the transfer of shares takes place between the old and the new owner and the sale-purchase contract has been signed, our experts in company formation in Hong Kong can initiate the registration procedure for the bought shelf company.
The company has already been registered with the Company Registry but the ownership details have to be changed once the transfer is complete. As a general rule, any changes in the company ownership or structure are to be registered. This is easily done, usually within one or two working days. One of our experts can help you throughout this stage.
Options like changing the name of the company, appointing a new director are available for clients purchasing shelf companies in Hong Kong. Foreign investors have the possibility to register shelf companies under the form of limited liability companies or companies limited by shares. Once the Articles of Association of the acquired shelf company are ready and they include the details of the new ownership they must be submitted to the Hong Kong Companies Register together with an application form and the paid registration fee.
The company’s identity can be very important for the new owner. This is why the name of the company can be changed from a general one that was initially appointed to a more targeted business name. In order to do so, investors will need to first check if the new name is available. The ones that have already been taken or that are too similar to a chosen name are included in the Index of Company Names, belonging to the Registrar of Companies. Certain words and abbreviations may be used as they are not necessarily considered to infringe on other names. A guideline for the registration of company names in Hong Kong is available and one of our agents can tell you more about these special considerations.
The shelf company is in many cases a cost-effective alternative. However, different shelf company suppliers will have different costs and the company can be more expensive if it has been incorporated for a longer period of time and thus it has an `older age`. When faced with the option of purchasing a more expensive shelf company, entrepreneurs can compare the costs related to starting a new company in Hong Kong and decide based on these as well as the time needed to incorporate. In some situations, investors may find that a shelf company suits their business needs completely. If this is the case, then they will be able to use the seniority of the company for gaining more credibility in front of banks and creditors and change the company specifics, such as the name and registered address, once the beneficial ownership transfer is complete.
Our agents invite you to watch a video about the advantages of a shelf company in Hong Kong:
As mentioned above, one of the greatest benefits of purchasing a shelf company in Hong Kong is the credibility an already incorporated company offers to its new owner in regards to business partners and customers. The company can enter into business contracts or business bids much faster than if the investor would choose to open a new LLC in Hong Kong. Also, according to the Companies Law in Hong Kong, in order to obtain a bank loan, companies may be required to prove they were incorporated a while back and bring proof of their corporate history. For example, if a foreign investor wants to obtain a loan for purchasing computers for the company, a proof that the company was registered six or more months before must be provided. Shelf companies can be used for various business strategies, as foreign businessmen establishing companies in Hong Kong can incorporate the background and history of their enterprise in a ready-made company thus obtaining a better image than creating the same image with a new company.
Our specialists in company incorporation in Hong Kong can provide shelf companies based on the investors’ needs and requests. Shelf companies have a set of attractive features, among which we emphasize the cost-effectiveness (in most cases) and the faster set-up process.