Sunday, May 9, 2021

Corporate shells

Corporate shells

Corporate shells

A corporate shell could be compared to a house that had been occupied by a family, before the family moved in, it was a house. But now it is just a shell, a skeleton, a simple house with no one inside, but if a family buys the house and moves in, it becomes a home.

Similarly, a corporate shell was once the home of an operating company, but once the operating company ceases to reside there due to adverse circumstances (bankruptcy or liquidation), all that remains is the shell.

Buying and selling corporate housings has become big business, just a couple of years ago a corporate housing was selling for approximately $ 150,000.00, today it sells for more than $ 500,000.00. Talk about inflation! The increase in price is due to increased scrutiny by the Securities and Exchange Commission and demand for shell from Chinese companies seeking to list in the United States.

As usual when there is money to be made, the vultures show up with their unscrupulous practices. In most cases, the shells are owned by the same operators who also act as consultants to the companies they help to go public. This can be a conflict of interest, but your property can be well concealed with the help of a securities attorney who may also have a piece of the shell.

The situation described above creates a major conflict of interest that regulators have yet to resolve due to the complexity of the many participants who work in harmony and are able to hide their actions from regulators.

If the consultant indirectly owns a shell and is trying to sell it to the company she is advising, how well will he represent the client in terms of price and how many shares he must retain? And how about we help the company do the proper research on the list of shareholders and the history of the shell?

Don't get me wrong, there are plenty of honest and well-meaning consultants and shell sellers who set up shells for the sole purpose of creating a vehicle for private companies to go public, just like you have the unscrupulous characters that show up every time there are an opportunity to earn money, you also have an honest enterprising individual who sees an opportunity and seizes it.

Once the operating company buys the corporate structure and merges with it, the owner of the private company receives the majority of the shares of the shell company (usually 90-95%) through a new issue of shares for the company private.

The public corporation will normally change its name to that of the private company and will elect a new Board of Directors who will appoint the officers of the company. The public corporation will generally have a sufficient shareholder base to qualify for listing on the Nasdaq Small Cap Market of the Nasdaq Bulletin Board. Although some shells have only 35-50 shareholders and are currently listed on the Bulletin Board or NQB pink sheets.

In our company we do not have an inventory of shells nor do we recommend a single supplier, instead we recommend several and after the private company selects a supplier,