Agnate, a corporate shell was once the at ease of an operating company but once the operating company ceases to reside there as of adverse circumstances ( bankruptcy or liquidation ) all that remains is the shell.
Buying and selling corporate shells has alter to ample bag, aloof a couple of age ago a corporate shell sold for approximately $150,000.00 today they action for upward of $500.000.00. Speak about inflation! The access in price is due to access scrutiny by the Securities and exchange commission and the demand for shell by Chinese companies seeking to alter to listed in the United States.
As usual when there is almighty dollar to be fabricated the vultures arise with their unscrupulous practices. In most cases the shells are own by the selfsame operators who are again acting as consultants to the companies they are helping to alter to public. This may be a conflict of absorption but they are able to adumbrate their ownership able-bodied with the advice of securities solicitor who may again accept a piece of the shell.
The bearings described above creates a huge conflict of absorption that the regulators accept yet to figure out as of the intricacy of the abounding participant who assignment in agreement and are able to conceal their actions from the regulators.
If the consultant indirectly own a shell and is trying to sell it to the company that they are advising, how able-bodied is he going to act as the client when it comes to price and the amount of shares that they are to Retain? And how about with assisting the company in performing the proper research on the shareholder list and the history of the shell.
Dont amuse me amiss there are abounding above board and able-bodied acceptation consultants and shell vendors who established the shells for the sole aim of creating a vehicle for private companies to action public, Aloof according to you accept the unscrupulous characters that arise every age there is an befalling to accomplish almighty dollar, you again accept above board enterprising alone who beam an befalling and booty advantage of it.
Once the operating company purchases the corporate shell and merges into it, the owner of the private company receives a majority of the shell corporation stock (usually 90-95% ) buttoned up a advanced affair of stock for the private enterprise.
The public corporation will normally chicken feed its agname to the private companys agname and elect a advanced Board of Directors which will appoint the officers of the company. The public corporation will usually accept a base of shareholders sufficient to accommodated the requirements for listing on the Nasdaq Baby Cap Marketplace of Nasdaq Bulletin Board. Although some shell accept as few as 35-50 shareholders and are currently listed on Bulletin Board or the NQB pink sheets.
At our company we dont accept an inventory of shells nor accomplish we recommend a single vendor, instead we recommend several and after the private company selects a vendor we access the action as if we were buying the shell for ourselves.
For added advice please appointment our website: http://www.genesiscorporateadvisors.com
About the author:
Joseph D. Quinones, President of Genesis Corporate Advisors has spent over 25 age in the securities industry. In 1992 he founded JDQ Financial Accumulation, Inc. and proceeded to body it up from a one man operation to the point where it employed abounding traders, advised abundant client and generate millions in revenues.
Originall posted April 28, 2012