What Is a Shelf Company and Should You Buy One?

Definition

A shelf company is a pre‑registered company that hasn’t traded. It sits “on the shelf” until someone buys it and changes the name and directors.

Pros of Buying a Shelf Company

• Speed: You can take control of an existing company within 24 hours, which is excellent if you need a registered entity urgently for contracts or tenders.
• Perceived Longevity: An older registration number may enhance credibility or meet minimum operating history requirements.
• Immediate Compliance: A shelf company usually comes with its tax number and statutory documents already in place.

Cons and Risks

• Hidden Liabilities: If annual returns or taxes are overdue, you inherit those obligations.
• Outdated MOI: Shelf companies often have generic MOIs that may not suit your business needs.
• Higher Cost: Purchasing a shelf company can be more expensive than registering a new company from scratch.

Buying Process

1. Due Diligence: Verify there are no liabilities or compliance issues. Request proof of up‑to‑date annual returns and tax compliance.
2. Name Change: File a CoR 9.1 form to change the company name. You may need to reserve the new name first.
3. Director Changes: Submit a CoR 39 to appoint new directors and remove the old ones.
4. Update Share Certificates: Issue new share certificates reflecting your ownership.
5. Check MOI: Amend or replace the standard MOI to suit your specific business needs.
6. B-BBEE and Other Compliance: Update beneficial ownership declarations and B-BBEE credentials, as applicable.

Should You Buy One?

If time is critical or your business needs to demonstrate a more extended history, a shelf company may be a viable option, provided you conduct thorough due diligence. Otherwise, registering a new company is typically less expensive and more straightforward.