Shell company

swapan pal (Querist) 21 November 2012 This query is : Resolved
at the time of taking over a company , the company which wants to take it over says that they will treat as shell company

now, what is shell company?

is there any provision in indian companies act ?

to discuss with them what r the items to be kept in mind ?

frankly speaking i am not any guidance even from net . su i request ur help

regards

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R.K Nanda (Expert) 22 November 2012
contact local company lawyer.

KIRAN AMARPURI (Expert) 22 November 2012
shell company is a company which is incorporated to take over another company.

M V Gupta (Expert) 24 November 2012
Wickypedia mentions that the expression "Shell company" is a specific term used by the US Securities And Exchange Commission" to refer to a publicly held company with no or nominal assets other than money. It also states that such companies are formed as dummy companies to hide the identity of the real person doing the business and are very often formed to commit frauds etc.
The website "moneyterms.co.uk" explains that the term means a company that exists but does not actually do any business or have any assets. Such companies exist merely as front for a person or organisation that wishes to hide its identity. The expression does not occur in the Indian Companies Act, 1956.In India when a company is taken over by another company (commonly referred to as merger) the company ceases to exist and is deleted from the records of the ROC. Hence u should as the representative of the company to be taken over ask for the true purpose of keeping the your company as shell company after take over and in the light of details take a decision.