THE SHELF COMPANY AND THE SHELL COMPANY: AN IN-DEPTH LOOK INTO THE DIFFERENCES
One of the biggest political and business scandals in modern history was the Panama Papers. It was a leak involving a massive database – more than 11 million records – detailing the high and complex levels of corruption. These include using offshore companies to hide millions upon millions worth of assets, a good amount of which came from illegal activities. The richest and influential figures also utilized such firms to evade taxes.
These offshore companies are also called shell companies.
The Panama Papers, as well as the other similar stories that came before, only adds to the notoriety of shell firms. It’s easy for many to associate them with shady deals and crimes. On the other hand, shelf companies receive the same treatment. Perhaps it’s because its mechanism also sounds similar to that of shell firms.
Cekindo wants to clear out the misconceptions and provide the differences in this article.
SHELF VERSUS SHELL COMPANIES
Shell and shelf companies, as they are, are legal entities, but they have varied structures and different potential uses.
A shelf company is a business entity that has been aged – that is, it has been registered (and continues to be registered) for a specific period. It usually spans for a year or more.
A shell company is a business entity that holds no permanent asset and is usually kept dormant.
Their purposes can be significantly different. You choose a shelf company if:
You want to begin a business as quickly as possible
As a fully registered company, a shelf firm can already have a bank account, legal documents, and even a business address (or domicile). These help significantly reduce the amount of time needed to build a company from the ground up. In fact, you don’t have to think of a new name anymore.
You like to enter in market where foreign investments are limited
A good example is here in Indonesia. It usually takes weeks or even months to have a business registered, and the business structures can be complicated for a lot of foreigners.
Shelf companies can already simplify them. They may already have at least the minimum number of shareholders. Moreover, once you buy them, your one foot is already through the country’s business door.
You want to display a proof of reputation
Unlike Western countries, most business deals in Asia are based on relationships. It’s not unusual for locals to feel suspicious about anything that’s new. In the process, they take time to get to know the company, and it may take long. As an aged but active company, a shelf firm gives your business a sense of reputation, authority, and longevity.
Shell companies can also have benefits. For example, you can use it to protect your capital or assets in case you’re doing a business in a country where political corruption is pervasive. It’s also possible that authorities implement random and unfair implementation of regulations. For the 1 percent, these firms can help them achieve a more low-key lifestyle in the eyes of criminals who want to harm them for their money.
Barring any malice, these can be helpful in protecting your assets legally.
Your choice, therefore, is according to your goal. Would you like asset preservation or market entry? If you wish to do the latter, Cekindo has ready shelf companies for sale in Indonesia waiting for you.