About Shelf Companies
What you should know…
What is a Shelf Company
A shelf company is a company that is already registered but has never traded or conducted business and holds no assets or liabilities. Essentially, the company is registered to sit on a ‘shelf’, waiting for a someone to buy it.
Shelf companies are ready for immediate use and they can be purchased by a person or group of people who wish to start a company without going through all the procedures of registering a new company. Shelf companies can be aged or brand new. In Zimbabwe, most shelf companies are private limited companies (PLC’s) though you can find other company structures such as Private Business Corporations (PBC’s).
Benefits of a Shelf Company
Sometimes the registration age is a consideration for presenting longevity. At other times a suitable trading name is a significant consideration.
However, common reasons for buying a shelf company include:
- It saves time involving effectuating the procedure of creating a new company.
- If you want to obtain bank loans, corporate credit cards, leases and other credit facilities, an aged company will be in better standing than a new incorporation
- Having a company image and business history may be important to you – the longer a company has been in existence, the more credibility it can be said to have
- Distributors and manufacturers often require a company to have been in business for a certain period of time before doing business
- Similarly, other companies will do business with an older company before a brand new one
- Showing longevity and enhancing your image with customers and lenders
- In many countries, government contracts may only be awarded to companies that have been trading for a number of years – an aged company may be beneficial to secure these
- Obtaining a Business Visa or Work Permits for company directors is easier with an established company
- To create an appearance of corporate longevity, which may boost investor or consumer confidence
- To gain access to investment capital
- To gain easier access to corporate credit
Company Structure of our Shelf Companies?
Our Shelf Companies are Private Limited Companies. Private Limited Companies account for the majority of Shelf Companies registered and sold in Zimbabwe. This company structure is particularly popular as the company exists as a separate legal entity from the individual owner.
This means the owners have limited financial liability, so their personal finances are protected if the company encounters financial problems.
Benefits of a Private Limited Company
- Limited financial liability – Shareholders’ personal finances are protected and they are only responsible for company debts up to the value of their shares.
- Incorporated status will greatly improve your professional image and business profile. Private Limited Companies are often more appealing to prospective clients and investors, giving the impression of a well-organised, established and reputable business.
- You can choose to sell shares in your company at any time in order to raise additional capital or grow the business.
- Another company can be a shareholder or director in a Private Limited Company. However, there must always be at least two natural (human) director.
- Ownership of a Private Limited Company can be passed on. As the company exists as a separate legal entity from the individual, the company can continue to exist even in the event of the owners’ death – unlike a Private Business Corporation.
- When you register a company name, it is protected and cannot be used by any other Private Limited Ccompany or Private Business Corporation, nor can another company register a name that is similar to your own company name.
- Private Limited Companies allow for strategic financial planning with regards to tax. Profits can be distributed by way of salary and dividends, and this can make it a very tax effective structure.
Documents for a Private Limited Shelf Company
- Certificate of incorporation
- Memorandum and articles of association
- CR 5 (former CR 6) – list of company addresses
- CR 6 (former CR 14) list of company directors and secretary(s)
- Share transfer certificates
- Share certificates
After buying a Private Limited Shelf Company
Private Limited Companies are required to follow a number of filing requirements set out in the Companies and Other Business Entities Act (Chapter 24:32).
Each year, the directors of your company will have to prepare and file an annual return and a declaration of annual general meeting and deliver to the Companies Registry.
Any profits generated by your company will be liable for 24.5% income tax. You may also have to pay VAT if your annual turnover exceeds the current threshold of ZWL1 000 000. Some companies register for VAT voluntarily because of the professional image it presents to clients and suppliers.
Frequently Asked Questions
How do I buy a shelf company?
- Choose a shelf company that meets your requirements
- Make an order
- Choose package
- Make payment
- Receive your company documents
Go through our Step by Step Guide to Purchasing a Shelf Company for more information.
What is required to purchase a shelf company?
- Shareholders details
- Directors details
- Company secretary details
- Company addresses
Go through our Information Required to Purchase a Shelf Copany for more information.
What reporting and filing requirements does my Private Limited Shelf Company have?
You will be legally required to prepare and file an Annual Return and Declaration of Annual General Meeting each year.
If your company is trading, you must also file Company Tax Returns and pay income tax on all taxable profits.
An Annual Return is a document containing details about your company at a certain date – directors, shareholders, registered office address, share capital. This is used by the Companies Registry to confirm and maintain the accuracy of their records and the information that is displayed on public record.
Company Tax Returns must be filed ZIMRA if your company is actively trading. Your tax return will determine the amount of income tax you must pay.
You must also report any significant changes to your Private Limited Company to the Companies Registry and, in some cases, ZIMRA.
Tel: (0242) 709 883
Mob: 0778 702 715
Shelfcompanies.co.zw is a service by Companies Made Easy (CME) a company registered in Zimbabwe at Hungwe House, 69 Jason Moyo, North Wing, Harare. CME specialises in Shelf Company Registration in Zimbabwe and related corporate secretarial services.
Company Number: 15985/2019