Shelf corporations are popular in sectors where government departments and suppliers require companies of a certain vintage. However, this can create some real legal issues for the company owner.

It’s illegal to use a shelf corporation shelf corporations  to bypass credit and age standards for business financing. Lenders can also detect this and close your accounts.
Company Registration

A shelf company is an existing entity that can be bought and used to trade. This type of business can be purchased at a fraction of the cost that it would take to register a new entity from scratch. There are several advantages to purchasing a shelf company, including the ability to start trading almost immediately. Moreover, buyers can avoid the hassle of setting up a bank account for a new company. This is particularly important if the purchase involves a foreign jurisdiction.

In order to register a company, the following steps need to be taken:

The first step is to find a reliable shelf company supplier. There are many to choose from, so it is a good idea to do some research. Ideally, the supplier should have years of experience in this area and be well-established in the market. This will give you peace of mind that they are reputable and will be able to provide you with a professional service.

Once you have found a suitable provider, the next step is to submit the required documents. You can either upload these to the website or send them by email. The company registration process can be completed in as little as three days. Once your documents are approved, you can begin trading.

In some cases, it may be necessary to change the directors of a shelf company. You will need to lodge a form CK2 with the CIPC (Companies and Intellectual Property Commission) in order to make this change. Once the CK2 is submitted, you will receive an amended founding statement from the CIPC which reflects the new membership of your shelf close corporation.

It is important to note that shelf companies are not meant to hide the identity of owners. Moreover, it is not possible to use them to circumvent law enforcement or prevent bank fraud. Those who use shelf companies for illegal purposes risk being arrested. They also risk having their bank accounts closed. Additionally, most lenders will recognize a shelf company and refuse to lend money to it.
Share Transfer

The sale of shelf companies is a thriving multimillion-rand business in South Africa with several large players active in the industry. These dedicated companies set up and register new companies, then get the official paperwork sorted out (including tax numbers and VAT clearance) before selling them off. Shelf companies can be purchased for as little as R3,000, but the price increases the older the company is.

Fuzile’s conflation of shelf and shell companies, combined with basic ignorance of company law and related practices, led to uninformed, subjective conclusions that he presented as facts. He was wrong about the fact that shelf companies are not necessarily shells, but he is correct in his assertion that shelf companies have no value and that if they were used as such, they could be subject to criminal prosecution.

Shelf companies can be useful in some circumstances, especially for small businesses that want to bid on contracts but do not have the time to wait for their new company to be registered. They can also be beneficial in jurisdictions that require a company to be in business for a specific amount of time before awarding work to them.

However, if you are planning to buy a shelf company, be careful and do your homework. Buying a shelf company that has been used for illegal activities can put you in legal trouble, not to mention ruin your reputation. You may be subject to fines, lawsuits and even prison time.

The process of changing directors in a shelf company is similar to the procedure in a normal Pty Company. A submission needs to be lodged with the CIPC (Companies and Intellectual Property Commission) for the change of directorship called a COR39. The Company’s Directors will need to keep a Share Register of all shares transferred to and from the Company as well as changes to the Company’s Directors.

Once the new directors have been appointed, the new Company will need to transfer the shares to them. This can be done through an online Share Transfer system such as Sharevault. Alternatively, the new Directors can use their own online Share Register to record these transfers. The new Directors will need to be authorised to sign the transfer forms.
Change of Directors

Shelf companies are a booming multimillion-rand business in South Africa. Dedicated firms set them up, get all the paperwork sorted and then sell them. Once a shelf company is sold the founding directors resign and new directors are appointed. Then the company is ready to trade, apply for tenders and, in some cases, even win multimillion-rand contracts within months.

However, the sale of these entities has created some controversy. The company that allegedly bought some of the shelf companies in question is now accused of using them for illegal purposes. Gouws, who is a practising attorney, says that he has been in the business of registering and selling shelf companies since 1997. He maintains that Fuzile conflated “shell” and shelf companies and that it is unfair to implicate him in the VBS Mutual Bank matter.

The idea of buying a shelf corporation makes sense for some business owners. They might want to establish a new business quickly, or they may need a few years in the company's books to qualify for financing. In either case, a shelf company is an excellent option.

A new owner can easily change the directors of a shelf company by filling out the appropriate forms and paying a small fee to the CIPC (Companies and Intellectual Property Commission). This process is incredibly simple. However, the onus is on the new director to keep a Share Register of all changes in directorsship or share transactions, and this can be done by using a service such as Sharevault.

Once the changes are made, the new director must submit a COR39 submission to the CIPC to reflect the change. This is to avoid any future problems with the new company and also to ensure that a clean company record is maintained at all times. This is especially important for investors who are purchasing a shelf company to use as part of their investment portfolios. The new company will need to be able to provide a clean company record when applying for corporate credits, business leases or entering into other business arrangements with suppliers and customers.
Change of Registered Office

Shelf companies are inactive businesses that have been registered with the CIPC but not used. They might not have liabilities or a registered address. They are basically on a shelf waiting to be bought and transferred to someone who wants to trade instantly. However, this practice is illegal and can be very dangerous if it leads to identity theft.

Shelf corporations land in a legal gray area, as there is no specific law against using them for illegal activities. Nonetheless, they are often used to conceal the identities of owners and directors and avoid paying taxes. Moreover, they may be a way to gain business credit or qualify for government contracts that require a certain amount of business history.

Buying a shelf company is a good option for people who need a business registered in a hurry. It can save time and money, as registering a new company from scratch can take up to a week or more. Shelf companies are also useful for entrepreneurs who need to establish a presence abroad, as they can help them bypass the lengthy process of applying for an overseas visa.

Some companies buy aged shelf companies to give the appearance of a long corporate history. This can be advantageous when bidding for contracts in countries that require a certain number of years of business to qualify. The appearance of an older business can also help companies to gain the confidence of clients and partners.

In light of these issues, the business of registering shelf companies has come under increasing scrutiny. While the benefits of shelf companies are numerous, their disadvantages outweigh the advantages. One of the biggest disadvantages is that a shelf company’s previous information can easily be uncovered through the Companies House “Search the register” tool. This can cause a great deal of confusion for potential customers and investors, as it could raise questions about the honesty of the company’s directors or shareholders. Furthermore, some services providers charge extra to change a standard constitution to something more tailored to the client’s needs. As a result, some users are reluctant to purchase shelf companies.