Is it illegal to buy a shell company? The pros and cons of buying a ready-made company!

Is it illegal to buy a shell company? The pros and cons of buying a ready-made company!

In addition, if you have to go through a name change process after purchasing a company, the bank will conduct a new background check, similar to the process of opening a new bank account, because the company’s shareholders and management have changed completely. If you do not pass the check, the bank may cancel the bank account and conduct a re-registration process.

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What is a ready-made company (shell company)?

What are the benefits of buying a ready-made company?

Is it illegal to buy a ready-made company (shell company)? Are there any risks?

A ready-made company (shell company) has no actual business or fixed assets, but is very popular with many entrepreneurs. A shell company is a company that has already been formed and registered with the Registrar of Companies, thus eliminating the time and money required to set up a brand new company. In addition to the convenience, there are many benefits of a shell company that are not well known; at the same time, there are certain risks associated with purchasing a ready-made company. This article will remind readers of these two aspects of buying a shell company.

What is a shell company?

The term “Shell Corporation”, or “Readymade Company”, originates from the days when Hong Kong followed the English company law. Generally speaking, a shell company is a limited company formed by the applicant under the laws of Hong Kong or the United Kingdom and is characterized by the lack of director appointments and share subscriptions, and is therefore essentially free of any operational and liability problems. This type of company is often used for purposes such as establishing a company entity quickly, hiding ownership, and restructuring assets.

What are the benefits of buying a ready-made company (shell company)?

One of the benefits of buying a shell company is that it saves time and money. If you need to start your business immediately, a shell company can provide the structure you need right away, eliminating the hassle of creating a new company, so you can get into business and focus on growth faster.

Another advantage is anonymity. If you want to remain anonymous in your business transactions, buying a ready-made company is a good option. This protects your privacy and security because you can use the name of an existing company to conduct transactions without revealing your personal identity.

Buying a shell company can also provide you with better credibility and rebrand your company. If you are looking for investors or partners, having an existing corporate structure can give them a stable impression. This will make it easier to attract investment and further expand your business with a credit facility.

Finally, buying a shell company can provide better tax planning opportunities for your business. Especially for overseas companies, buying a Hong Kong shell company can provide the advantage of lower tax rates and the ability to apply for tax exemptions, which can further reduce the operating expenses of the company.

Is it illegal to buy a ready-made company (shell company)? Are there any risks?

The purchase of a shell company is legally recognized in Hong Kong and is therefore perfectly legal. The shell companies sold in the market generally do not have appointed directors and shareholders, nor do they have any business, thus eliminating the risk of debt problems and commercial disputes.

However, there are also risks associated with the purchase of a shell company. The risk of buying a company with a bank account is that deposits may be withdrawn at will. If you do not actively transfer your name to the bank and the account holder is not updated in the bank system, the old holder may withdraw the funds from the account at any time. The above information is for reference only. If you have any questions or information about tax filing (personal tax return, corporate tax return, accountant tax return), you are welcome to contact our professional advisors and we will provide you with a free quote and consultation service later.

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