What is a Shelf Company?
A shelf company, or an “aged” or “off-the-shelf” company is a company which was duly registered with the Corporate Affairs Commission under Nigerian law (or the laws of any other country), but said company has never traded, conducted business, or been used for any purposes whatsoever. Such a company holds no assets or liabilities in its portfolio. In other words, such a company is literally “on the shelf”; it was established for the purpose of beign resold to someone else who requires immediate use of the company. We establish shelf companies and keep them ready for you to purchase them and use them for your business needs immediately upon purchase; this process entails us transferring the shares in the shelf company to a nominated shareholder [purchaser], changing the registered address of the company with the Corporate Affairs Commission, changing the directors to the new nominated directors of the company, and if desired, even changing the company name as well.
Why does a Shelf Company exist?
Such company is incorporated for the sole purpose of keeping such a company “on the shelf” and selling same to buyers who need a pre-existing company.
How does a Shelf Company differ from other companies?
An “off the shelf” company differs from other companies to the extent that it has already been duly incorporated with the Corporate Affairs Commission, and, once sold to an interested buyer, is ready to do business and does not need to be registered from scratch. It is a company that has been registered but has not yet commenced trading or any other business activity.
Common reasons why people would buy a company
- To bid on Contracts – Depending on circumstances or even law, a company might be required to have been in existence for a specified time before they can bid on certain contracts. So, where individuals or entities would want to bid on such contracts but their corporations have not existed for the specified period of time, the persons involved can flip a “shelf company” off the shelf, change its ownership to themselves—including changing all necessary details like registered address, objects of the company, shareholders, share capital, company directors, and even the company name—then using the “new” company that meets all requirements, to place their bid. This places them back in the game and they can go ahead and use the entity to bid on and work their contracts. Thus, a shelf company provides the corporate existence history you need to make your bid more attractive to banking institutions, business partners, and potential customers/clients.
- To show corporate longevity and legitimacy – Buying an aged Shelf company which has existed for a specified period of time has the potential to increase your business credibility and reputation, and can thus help you to attract and retain customers/clients. Some individuals are wary of doing business with new corporations, and showing that a company has been in existence for some time can potentially alleviate their fears and make them amenable to business dealings with you.
- Compliance – Any shelf company maintained in our portfolio—and that of our associated companies—are generally 100% legally compliant with the position of the law. The companies, registered on kept on the “shelf”, have no assets or liabilities, which means they have a 100% clean credit history with the Corporate Affairs Commission. The certificates of incorporation of the companies are readily available, the shelf companies have never traded or incurred any liabilities whatsoever, annual returns are duly filed for them as and when due, and they are ready for purchase and immediate use.
Why would a Nigerian or foreign entity doing business in Nigeria need a Shelf Company?
In our opinion, many need shelf companies for the following reasons:
- The company has been duly registered with the Corporate Affairs Commission.
- The company must have obtained its Tax Identification Number
How to buy an “aged” company
To purchase a shelf company in Nigeria, you need to buy the share capital from the shareholder on the shelf company’s records at the Corporate Affairs Commission and pay the “purchase fee” from the vendor of the company. To buy the share capital, the purchaser will need to execute a Share Purchase agreement to be executed by both parties and then filed with the Commission. Please note that transfer of these shares will trigger payment of stamp duties to the Federal Inland Revenue Service.
What Documents will I get when I buy a company?
- Share Purchase Agreement
- Memorandum and Articles of Association of the Company
- Certificate of Incorporation
- Updated CAC Form 1.1 [which is obtained upon making the share allotment filing at the Corporate Affairs Commission]
What Next?
If you require expert corporate governance advice and need help purchasing a shelf company in Nigeria—no matter its years of existence—please get in touch with us. Providing companies for immediate purchase is one of the services we offer. Please call us on +2348064231176, or email us at [email protected] and someone from our team will be happy to assist you.