What is a Shelf Company and How to Buy One in Singapore?

Staff Writer

March 4, 2024

What’s in the article?

Are you considering incorporating a company in a prime location like Singapore, but don’t want the hassle of starting from scratch? Then, one of the best alternatives you can go for is to purchase a shelf company!

Purchasing a shelf company can be a better option for people who don’t want to face the tedious requirement of incorporating a company in Singapore.

What is a Shelf Company?

A shelf company is a legally established business entity that exists and is registered but remains inactive, with no business activities or income until it is purchased by a buyer who intends to commence business operations.

Typically, shelf companies are incorporated with minimal requirements such as a paid-up capital of S$1, a resident company secretary, a nominee director, and a single shareholder.

The purpose behind creating a shelf company is to sell it to individuals who are eager to promptly initiate their business endeavors. After all, the primary appeal of a shelf company is its swift facilitation for business operation, as buyers can bypass all the hassle that comes with registering your business in Singapore.

The acquisition of a shelf company typically takes only a few days. And afterward, you can make necessary amendments to the essential info on the articles of incorporation.

What Are the Advantages & Disadvantages of Buying a Shelf Company in Singapore?

The Advantages The Disadvantages
- Time and Convenience: Setting up a new company can be time-consuming, but with a shelf company, you can skip some of the initial bureaucratic processes such as taking care of the incorporation, appointing a director, finding a secretary resident, and many other must-do’s.
- Established Image: Having a company with an older registration date can create a more established image, potentially boosting credibility with clients, partners, or investors. On the other hand, newly incorporated companies are essentially unknown, thus you need more time to gain trust.
- Increase Business Credibility: Each company will have a Unique Entity Number (UEN) as its registration number, and the first four digits of the UEN denote the year of the company’s incorporation. The older registration number can help to increase business credibility among stakeholders, as it will create the impression that the company has been in operation for a longer duration.
- Costly: Shelf companies often come at a higher upfront cost compared to starting a new company. Usually, the price will be around S$2000 - S$10,000, but it can be more depending on its date of incorporation.
- Limited Customization: While the company is technically yours after purchase, it might come with a predefined structure. If you were hoping for a specific setup or brand identity, a shelf company might not be able to provide the ability to customize as you need.
- Potential Inherited Issues: The shelf company might have some history, and you might inherit any existing liabilities, legal issues, or debts associated with it. Thus, it is crucial to thoroughly vet the company’s background before purchasing.

How to Buy a Shelf Company in Singapore?

Below is the comprehensive step-by-step guide you should bear in mind if you’re planning to buy a shelf company in Singapore!

Step 1: Assess the Pros and Cons of Purchasing Shelf Company

The first step you should do is to evaluate whether a shelf company aligns with your business needs and preferences. Keep in mind that you have the option to form a new company in Singapore, thus you might want to evaluate all the benefits and drawbacks of purchasing a shelf company. You can check the pros and cons of purchasing a shelf company that we have provided in the table above.

Step 2: Engage a Professional Consultant

If you lack knowledge of incorporation processes in Singapore, it is a must for you to seek help from reliable corporate service providers such as Wealthbridge. Our experts at Wealthbridge can help ensure adherence to all legal prerequisites of acquiring a shelf company in Singapore. We will be able to help you out, ensuring your journey of building a business in Singapore is easy and hassle-free!

Do keep in mind that choosing the right business consultant is important as you will rely on their expertise for compliance, background checks, negotiations, and legal matters.

Step 3: Verify Company Profile and Compliance

Despite acting as a dormant, a shelf company still needs to comply with all the legal processes that ACRA established. Thus, you should check the chosen shelf company's details with ACRA and confirm its business structure. You should also confirm compliance with AGM, accounting, annual returns, financial statements, and corporate tax filings. Additionally checking its online presence to ensure a positive reputation is also a must-do to prevent any future issues.

Step 4: Negotiate and Sign the Sale-Purchase Agreement

This step will need you to engage in negotiations with the owner of the shelf company regarding the pricing and any support they can provide with the ownership transfer process. In this phase, the business owner must affirm that there are no outstanding liabilities associated with the shelf company.

Before finalizing the agreement, you should thoroughly review and understand the sale-purchase agreement to ensure all potential risks have been addressed.

Step 5: Transfer Ownership

After completing the sale, you can finally assume full ownership of the shelf corporation.

Step 6: Amend Articles of Incorporation

After the company is fully yours, you can modify the constitution, directors, shareholders, and even the company name if needed.

Step 7: Register Company Updates

If you make necessary changes to the company, such as changing its name, location, and other essential information - you should inform all of this to ACRA. This is crucial to ensure compliance with statutory requirements.

Step 8: Open Singaporean Bank Account

To ensure smooth business operations, establishing a corporate bank account in Singapore is crucial. Thus, when you already have the company and registered it as yours, the next step you should take is to open a corporate bank account.

By following these steps, you can smoothly acquire and customize a shelf company in Singapore to suit your business goals while ensuring legal compliance!

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