We have identified misconceptions regarding Shelf companies, or better known as “ready-made companies”. By definition they are considered a fast track Option to set up a new business in Spain. Attractive to many because they are registered companies that have never conducted businesses and are available for purchase. However, nowadays, many myths exist and reality of registering a shelf company has been idealized. Our corporate lawyers would like to clarify some of the realities of Shelf companies in Spain
As told by Lexidy Corporate Lawyers: Here are 5 of the most common myths regarding buying Shelf Companies in Spain:
1.Myth: The purchase of a shelf company is cheaper than the establishment of a new company, as it will save me the costs and fees to be paid in relation to the incorporation.
Reality: The purchase of a shelf company does not only entail costs for legal assessment (as well as Notary and Registry Fees). Typically, also comes with a price to be paid to the seller of the shelf company and may therefore result in a larger financial burden than that associated with the incorporation of a new company.
2.Myth: “I can start the next day after I buy a shelf company”
Reality: It takes time. Buying a shelf company implies accomplishing with formalities and forms that in specific cases can take time and may not be exempt. The time it takes may vary greatly depending on the case.
3.Myth: A well-aged shelf company will immediately grant you access to considerable bank loans that will allow you to finance the initial investment to start off your business.
Reality: The granting of a bank loan typically requires a strong credit rating. Thus, banks do typically not offer stellar loans based wholly upon the number of years that a company has been incorporated for. In his context, it has to be borne in mind that a shelf company does not have any business history, no financial records and no field tax returns.
4.Myth: Buying a shelf company is easier and faster than establishing a company.
Reality: in practice, buying a shelf company can take the same time, since the corporate changes have to be registered at the Mercantile Registry. There are many factors and it varies depending on the case.
5. Myth: The purchase of a shelf company guarantees the existence of a legally “clean” entity and will facilitate the acquisition of customers and the conclusion of contracts.
Reality: There is no guarantee. It is vital to conduct a thorough study of the company’s records (so-called Due Diligence). It is important to be aware of in order to understand any existing obligations and liabilities of the target shelf company.
How can Lexidy Help?
At Lexidy we can help you acquire one of our available Shelf company in a record time or help you buy the shares of another shelf company. Contact us and get a free consultation.