For entrepreneurs looking to get their operations in the UK off the ground as quickly as possible, investing in a ready-established firm may provide a shortcut. Instead of the bureaucratic hang-ups of incorporating a business yourself, you can buy a bank titled company ready and compliant or ready made company in the UK, that will be an existing corporation in good standing, ready for operation at a moment’s notice.
What is a shelf company?
In British English, the terms “shelf” and “shell” are often used interchangeably and refer to a company that has never carried out any business, while in American English the term refers to a company that has had no activity. It has been “sitting on the shelf,” so to speak, waiting for someone to pick it up and put it to work. Such companies are generally established by formation agents in order to be sold on at a later date. When you do buy one, you then inherit a firm with its own incorporation number and date, and this is where it can help when it comes to how your own business is fronted.
Why choose a ready-made company?
Various advantages make it worthwhile for entrepreneurs choose this route:
- Speed and simplicity
It takes time to raise a firm, even in the UK. With a turnkey firm, you avoid all these steps. That it’s already got its legal formation in place, and that you can run up your operations as soon as the title and associated paperwork are duly reassigned. - Credibility through established history
A longer-in-business company will sound more established when courting potential partners, clients, or lenders. This feeling of history can make people trust you faster. - Immediate trading capability
As soon as the firm changes hands and the notable amendments are made with Companies House, you will be free to enroll in trading as an authorised organisation. - Easier access to credit
While not a given, some lenders and providers tend to do their operations with individuals who have been in business longer, even if it has just been sitting on the back burner. This can lead to quicker entry to business loans or overdraft facilities.
How the purchase process works
There are a number of clear yet critical steps you need to go through when acquiring your such kind of an organisation:
- Step 1: Getting a good agent
First of all, you need to get a good supplier. Look for a trustworthy formation agency or law firm that serves the turnkey firm trading. Stay away from unproven sources and look for a clean record and positive client reviews. - Step 2: Choose the right organisation
Turnkey corporations often have uninspiring names and structures. Go with one that suits your models and is easy to white label. - Step 3: Complete KYC and AML checks
You will have to abide by AML (anti-money laundering) KYC rules which usually require photographs of you and proof of address as part of the effective transfer of title procedure. - Step 4: Convey of title
After all the due diligence is taken into account, the seller will change shares and replace the board, at which point you are officially the new owner of that company. - Step 5: Receive legal documentation
You will be forwarded significant paperwork like:- Business incorporation document
- Memorandum & Articles of Association
- Share Certificates
- Board Resolution for the transfer
- Minutes
- Step 6: Update corporate details
Offer to update your information with Companies House (CH), for example:- New directors
- New shareholders
- Updated registered office address
- Revised articles (if applicable)
- Step 7: Begin trading
Once everything is set, you can simply open a company bank account and be ready to do business.
Key considerations before purchase
Though there are many pros, you should remember these three things:
- Cost
Shelf companies are typically more costly than forming a new company. Be sure it’s an investment that is right for you. - Due diligence
Before you begin, run a thorough due diligence search to confirm the company is indeed in dormant status. Check for:- Existing debts
- Legal claims or liabilities
- Former owners or interested parties
- Legal compliance
Verify that the company does not have a history of wrongdoing. Legal or financial problems that follow could put your business at risk. - Brand alignment
Business name: Reserved corporate names tend to be less gender-specific than the above. Rebranding the organisation to correspond with your brand could require even more bureaucratic tasks.
Final thoughts
Acquiring such a type of an entity, that allows you to come to trade quickly and easily – this can be particularly important when time and trustworthiness are of the essence. Yet, of course, there are caveats. Be sure you’ve fully examined the legal, financial, and branding aspects before moving on. If done correctly (at a reputable provider and being particularly vigilant with due diligence), it can be a great prospect to break into the regional trading sphere. If you’re time-starved and hoping to start working out of the gate, a turnkey firm could be the practical alternative for your next business.
Are shelf companies legal in the UK?
Yes, shelf companies are absolutely legal in the UK. They are shell companies designed for sale (ready-made for effortless handover), and they’re legal entities as long as all transfers go through CH and are in line with AML regulations.
Is buying a shelf company a good idea?
You might want to consider buying a shelf company if you require:
- An organisation with a date of submission older than that
- To be faster than starting from zero
- If a company’s age is mandatory in applications, subscriptions, contracts, liquor licenses, and credit limits applications
But you must check that the company has no outstanding debts or liabilities and that the date of submission is advantageous to you.
What are the disadvantages of a shelf company?
Some disadvantages include:
- Not appropriate for all industries, such as those that need specific licenses based on operations, not age
- It is more expensive than starting a new business
- Risks to mitigate during due diligence
- Dormancy and liabilities are risks to verify
- Costly administrative processes of shifting the organisation title, directors, address, etc.
How much does it cost to make a limited company in the UK?
Costs of setting up a new limited company generally speaking:
- £30 to £200+ with an organisation incorporation agent, depending on the level of additional services Shelf companies vary from a few hundred pounds to more than £3,000, depending on age and history.
- £12 if registered with Companies House via web resource
- £40 if you register on paper
Shelf company vs new company – what are the differences?
Such type of entity is one that is submitted as a lawful unit but has not been trading. A newly submitted business has no history. The difference between a ready-made firm and a turnkey company is that shelf companies may look older because they have already been incorporated.
Can you buy a company off the shelf in the UK?
Yes, acquiring and selling such a firm is legal in the UK as long as the buyer and seller comply with the KYC and AML rules.
How long after purchase can I start a shelf corporation?
Usually, you can begin trading within 24-48 hours from when the shares have been transferred and the update filed with Companies House, and at times even faster.
Do I have to keep the same company name?
No, but you can alter the name of the company via a resolution of a name change and advising Companies House of completion of form NM01.
Is there any existing liability of the business?
A good ready-made firm will not have liabilities or debt. But don’t forget to do your homework and get the seller to sign a release that the company is idle.
Can I open a bank account for the shelf company?
Once the change of title is confirmed and the documents are updated, then you can open a corporate bank account. Banks will be able to run normal checks, e.g., KYC and proof of address.
Is it possible to use a shelf company for regulated activities?
It depends. If regulatory approval is required for your line of business (i.e., monetary services), the age of such organisation does not substitute for proper licensing. You should always seek advice from the appropriate UK regulatory authority.
Can I get a business loan with a shelf company?
With such an establishment, you’ll at least have a longer history of registration on your side when it comes to securing a loan, while lenders will also weigh your business plan, financials, and personal guarantees.
How old are shelf companies?
Shelf companies for sale are anywhere from a few months to several years old. Larger companies sometimes charge more because of perceived credibility.
When I purchase the business, will my name be revealed on any documents or records?
Yes, when you become a director or shareholder, your name and details are written into the public register of Companies House.