Setting up a business or merging it with another one isn’t enough for success. Before starting a business, you need to decide whether you want to start your company from scratch or want to acquire a ready-made company.
In this post, we’ll discuss what is off-the-shelf company, why you need to have it, how to buy it, what documents you’ll get after buying and what are your responsibilities. Let’s delve into it!
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What is an Off-the-shelf company?
It is a limited company that is already registered in England or Wales at Companies House, but it is a dormant or non-trading company that is ready for immediate use. Buying the shelf company was a popular way to form a company before online incorporation, as it used to take weeks to start a company.
Usually, it is registered with a company formation agent and then transferred to the customers. So many company formation agents keep the list of these companies to sell them to buyers making them the newly registered owners.
Why Do You Need to Buy?
The advantages of buying a ready-made company depend on many factors, including the type of business you operate and the purpose of buying. Here are some of the benefits that may convince you to buy this company:
- You can quickly acquire a company and can immediately use it.
- It allows you to win contracts that require the longevity of your business.
- Its appearance of corporate longevity can gain the trust of investors and clients.
- Access to investment capital.
How to Buy Off the Shelf Company?
To buy a ready-made company, you should buy all the share capital in the company to be the complete owner of the company. So, the stock transfer form is required to be made by the transferor (registration agent).
According to the Stock Transfer Act 1963, the stock transfer form needs to include:
- Details of the amount
- Shares Types to be transferred
- Amount details
- Type of shares to be transferred
During the transfer of shares in a private company, you may be liable to pay stamp duty to HMRC for the proper instrument of transfer. Once the stamp duty is paid by the buyer of the shares. Then, HMRC will stamp the stock transfer form for the registration of the company.
The inclusive details of the transfer may be recorded in a share purchase agreement. Bear in mind that it is not legally required, but it is better to have it. This agreement will act as a shield against many issues for both buyers and sellers. After the successful transfer, new buyers can make changes to the shelf company particulars.
What Documents Do You Receive from the Agent?
Once you purchased a shelf company, the agent will normally provide some or all of the following documents:
- Signed and Stamped stock transfer form
- Certificate of incorporation and non-trading (up to the reservation date)
- Memorandum of association
- A copy of the change of object resolution (if required)
- The resignations of the original director and secretary
- Company registers and its seal
- Copies of the articles of association
- Transfers in blank of the subscribers’ shares
Responsibilities of the Buyer
After the purchase, the buyer needs to take the following actions:
- Doing updates to the register of directors
- Holding the first board meeting with new directors.
- Registration with HMRC for any continuous corporation tax obligations.
- Doing updates to the register of members and people with significant control (PSCs)
Are you looking for professional tech-savvy tax advisors and accountants in the UK to guide you? Contact us now!
Quick Sum Up
Now that you know what is off-the-shelf company, why you need to have it and how to buy it, you need to take into consideration various factors before buying one like its past details etc. This company would be registered first by a formation agent in their name and then transferred to you (buyer). So you can compare different quotes to get the best price for your off-shelf company.
Disclaimer: This blog is written for general information on the topic.
