Buying a shelf company in the UK: A Complete Guide

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:

1. 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.
2. 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.
3. 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.
4. 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.