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Forming shell corporations for profit

Discussion in 'Other Off Topic Forum' started by cohiba_man, Jan 8, 2004.

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  1. cohiba_man

    cohiba_man Formula Junior

    Jan 23, 2003
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    #1 cohiba_man, Jan 8, 2004
    How many of you have heard of this? I met a guy today who apparently forms shell corporations for a living. He creates corporations that strictly follow SEC regulations to be allowed to be traded on the stock market, and after whatever time period they allow (I believe its 2 years), when the corporation is ready to take to market, he offers it to private companies looking who don't meet the listing requirements, for a reverse merger (at a profit to him)...sounds like a neat little niche, anyone have any experience with this kind of thing, or have you even heard of it?
     
  2. darth550

    darth550 Six Time F1 World Champ
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    Jul 14, 2003
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    #2 darth550, Jan 8, 2004
    This gets complicated for the buyer very easily (kinda like getting DOT certification for your Euro...times ten) alot of things have to fall into place. It also requires some serious research into the history of the (shell) company but yes...it can be rewarding.

    DL
     
  3. Juice It

    Juice It F1 Rookie

    Sep 22, 2002
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    #3 Juice It, Jan 9, 2004
    How would a shell company with no assets meet the SEC guidlines to be publicly traded? If it has assets and cash flow than how is it a shell company? Sounds good in theory but not understanding how it would work. There are tight regulations and hoops to go through to be able to take a company public.
     
  4. Sensational1

    Sensational1 Rookie

    Nov 1, 2003
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    Michael Basic
    #4 Sensational1, Jan 9, 2004
    I do believe that one of the requirement for a company to be taken public is to have 10,000,000 minimum in gross revenue.
     
  5. ILuv4Res

    ILuv4Res F1 Veteran
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    Aug 8, 2002
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    #5 ILuv4Res, Jan 9, 2004
    Typically, reverse mergers into the shells aren't into NYSE companies or other highly visible traded entities, rather they are into obscure, low volume areas. Most shell companies are ones that are failed and/or failing companies that are traded on the pink sheets and/or other low level arenas. The most difficult part is finding a shell that doesn't have baggage that comes with it (ie debts owed, lawsuits, etc....)

    It is always the 'dream' to start a company and take it public. This is a way to boost one's ego and do so. However, with the new SBO act, public disclosures, etc... I wonder how popular this tactic will remain.
     

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