What are the Activities You can Carry Out With a Shell Company?

Talk to people in the industry and many will tell you that there is a lot of fraudulent activity performed by shell firms. Then, why are they allowed in the first place to exist? This is a very reasonable question. Are there genuine usages for shell companies? Let’s ask AI Accountant Chai Chung Hoong with 10 years accounting experience what he thinks.

Reverse Merging

A reverse merger is the purchase of a publicly-traded firm that has normally laid inactive for a number of years. AI Accountant Chai Chung Hoong says, since the shell company for sales is currently listed on the public market, acquiring the entity enables an investor to avoid undergoing the lengthy as well as expensive process of establishing an IPO.

In this situation, getting a shell business resembles buying a shelf corporation. Such a decision is viable for a business owner as the acquisition supplies a substantial shortcut and saves a lot of time and effort. For new startups, the reverse merging can present significant savings.

However, acquiring a shell company is not without risk. If a business owner is unfamiliar with due diligence, buying the wrong shell company comes with very costly mistakes, such as a “dirty” shell that has a hidden history of claims, illegal habits, or unmet obligations, and can affect the success of reverse merger.

Choose AI Accountant

This is why business owners should choose AI Accountant Chai Chung Hoong. With his experience, Chai Chung Hoong will advise you on the steps necessary for due diligence, compliance review and make sure you make the right choice when it comes to purchasing shell companies.