What is a blank check company?
A blank check company is a development stage company with no specific business plan or purpose or one that has indicated its business plan is to engage in a merger or acquisition with an unidentified company or companies. Even though this company is created through a filing with the SEC under the 1933 Selling Stock Act, the SECs Rule 419 specifically provides that, even though registered, stock in this kind of a shell cannot trade so long as the company is a shell company. These shells are no good.
of the dozen [blank check companies] that have come public [filed Form 211s] in 2008, nine received initial funding infusions from merchant banks, hedge funds, or private-equity funds. Blank-Check Backers Get a bit Bigger, by Lynn Cowan. Published in THE WALL STREET JOURNAL, March 24, 2008. A Shelf Company, refers to a privately held corporation that was formed at some prior point (e.g., six months, one, two, three or more years) with the intent of transferring it to a yet unnamed buyer, kept current and in good standing by its founders with the Secretary of State of its domicile state, sometimes established with a nominal amount of paid in capital ($100 or so) on deposit with a bank so as to establish and date stamp the companys banking relations, and then mothballed or never actually launched as an operating entity. A Shelf Company is not a publicly traded company, nor have any of its authorized shares been registered with the SEC. Strategic Value: Allows the purchaser to acquire and
