Use of “Shelf Corporations” rapidly declining

The concept of Shelf Corporations has been widely used in the corporate/commercial practice for years where a business corporation would be created by a lawfirm and maintained throughout time until a firm’s client buys it.

What advantages such an arrangement offered to the firm’s client? First and foremost, ability to get an incorporated company at any time of the day, regardless of the Ministry hours and processing times. Further, the Shelf Corporation would have a status of a long-standing company, which would have the banks consider it more seriously when handing out a business loan than it would a just-incorporated company. For the firm it meant looking efficient in the eyes of the client: having a pre-registered Shelf Corporation waiting to be adopted at any time meant that a lawyer could quickly amend the necessary information in its corporate documents to change its addresses and directors.

However, despite of all these benefits, there has been a dramatic decline in the popularity of Shelf Corporations. Factors such as the ease of electronic registrations, to the concept of directors’ liability, among others, have all contributed to the imminent death of Shelf Corporations.

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