Legal Question in Business Law in New York

Re: Shell Corporations

These days it's hard to imagine any. Back years ago, when it took some period of time to form a corporation and push through the filing documents, it was seen as an occasional time saver to have a corporation sitting around that one could use quickly. Now, with two hour filing in Albany, that's not necessary.

Re: Shell Corporations

There's another possible use. Publicly-traded shall corporations are formed, sold and bought for the purpose of going public quickly. Rather than do an IPO, which is expensive and time-consuming, business promoters might buy a majority (or all) of the stock of an inactive (shell) corporation whose stock was already registered, and merge their business into it. In certain states, forming such corporations was relatively easy and entrepreneurs made a business of setting them up and selling them off. Tighter securities laws and public apprehension about companies that have gone public via merger into a shell has put a damper on the practice. You used to see ads for public shells in The Wall Street Journal classifieds ten or more years ago. I haven't seen one recently (but on the other hand, I haven't been looking).