When a foreign entrepreneur has decided to invest in Ireland, he or she can either incorporate a new company or purchase a shelf company. Shelf company, also called readymade company, is a legal entity that has been incorporated previously and sitting on a shelf ready to be purchased for immediate use.
Generally, there are two types of shelf companies. They might be called differently, but the main idea is that the first type of shelf company is clean, meaning that no transaction has ever taken place in this business. The other type of shelf companies are usually older and with operational history. While the investor has to be cautious and do his due diligence before the acquisition of an aged shelf company in order to avoid purchasing a company with debt or other liabilities, there are various advantages and reasons, why investors might choose a shelf company that has actively operated some time ago.
One of the main reasons why investors might prefer an acquisition of a shelf company rather than incorporating a new legal entity is the difference in the time spent for both procedures. When setting up a new company, an entrepreneur has to go through a complex and time consuming procedures, whereas a shelf company is already incorporated therefore the business can start operating almost immediately. Generally in Ireland, the new shareholders are able to acquire a company number within just 24 hours or even in the same day. Another important advantage is the additional credibility with suppliers and customers if a company has been incorporated some time ago rather than recently. Also, if you are operating as a Sole Trader or in a Partnership with a legal entity which has been established in the past, it is also possible to receive tax planning benefits.
Procedure of shelf company acquisition in Ireland When purchasing shares of a shelf company in Ireland, you are required to notify the Companies Registration Office. While the process of the share transfer is similar to an incorporation of a new company, it requires significantly less time and documentation and the company can be used immediately. The new shareholders of the company are required to provide the agreement of share purchase and, if the buyer is a legal entity, an extract from the Trade Register is also necessary. The shares’ purchase agreement has to be notarized and Articles of Association has to reflect all material changes, such as the new company name, different object or activity, registered address and information about the new shareholders.
Generally, the easiest way to purchase a shelf company, especially if you are a foreign entrepreneur, is through companies offering such services. These companies acquire inactive companies and keep them until someone is ready to buy them. They also incorporate new companies for the same reason, but the main difference is that these shelf companies have never had any operational activity. The procedure is relatively straightforward and in case of any uncertainty, professionals will be there to help you and in few easy steps you will acquire a shelf company:
Find a company that provides shelf company acquisition services. Perform a due diligence on this company as you have to trust them with their research and ability to offer quality shelf companies without liabilities. File an order and provide all necessary information necessary for the process. An official document allowing to operate on behalf of the new shareholders needs to be signed. Generally, the service fee and the shelf company’s price needs to be paid in advance of documentation processing. Your service provider will transfer the shares to the new shareholders, change the directors, secretary and the registered address of the company as well as can change the company name if necessary. Some service providers also offer their premises for the registered company address. Typically prices vary depending on the service provider and the quality as well as the age of the shelf company.