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What are the risks of a shelf corporation? Can you recommend a good company to speak with?

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Answers (3)
William A. Price
www.growthlaw.com
Business Lawyer
DuPage County, IL

"Shelf corporation" usually means an entity which has already registered with the SEC or a state securities office to sell interests to members of the general public. If your business model will change, there will be substantial revisions to the prospectus necessary in any case before your sales can go through, and appropriate fees to be paid, both to advisors and to regulators. Sarbanes-Oxley (SOX) compliance (including CPA audited financials, not just management representations) will also cost a lot of money, as it does for all public companies.

Some shelf registered entities have built in capital losses that let your investors offset gains over their investment period, and others may have problems, like ongoing liabilities. These mean that, like any other business purchase, you need to do due diligence. What if you bought an asbestos producer shell?

In general, the "shell" company (or "shelf registration") is a reasonable tool for those experienced enough in small public company registration to reduce time to listing for publicly traded securities. Caution is needed to validate the time or cost savings your seller suggests may be possible.

Hope this helps,

Bill Price
wprice@growthlaw.com

Mar 26, 2013
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Hey Ray,

I am a CPA, CFP and a CSA. I soecialize in small businesses and can help you. There are some advantages including retirment plans that others might not understand. Contact me at Ron@VossFinancial.Com if interested.

Sep 16, 2011
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The BAF Group LLC
MD

Do you mean a "SHELL" corporation?
And the risks/benefits depend on what you want one for? What is your intention? What is your use?

Sep 4, 2011

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