SHELF COMPANIES SELLING LIKE HOT CAKES TO FOREIGNERS

 

Shelf companies are pre-registered, inactive companies that are ready to be sold to individuals or businesses. 

In Papua New Guinea, a shelf company is legally incorporated and meets all regulatory requirements but has no prior business activity or liabilities. These companies are kept dormant until purchased, at which point the new owner can start operations immediately. The companies are registered with the Investment Promotion Authority (IPA) under the provisions of the Companies Act 1997.

Purchasing a shelf company allows immediate commencement of business operations, which is especially useful for time-sensitive opportunities like government tenders or contracts.

A shelf company’s pre-existing registration can provide the appearance of a longer operational history, enhancing credibility with clients and investors.

Buyers can avoid the lengthy registration process and focus on business activities while still meeting all legal requirements.

Shelf companies could potentially be used for illegal activities, such as tax evasion or money laundering, although regulatory measures are in place to minimize these risks.

Shelf companies offer significant benefits for entrepreneurs and investors looking to enter the PNG market quickly. 

However, it is important for potential buyers to conduct thorough due diligence to ensure compliance with current regulations and avoid any potential legal or reputational risks.

Now you may wonder why Asians own and operate almost 80% of small to medium businesses in PNG. From tuckershops to gambling outlets, nightclubs, hardwares, autoparts etc.

Some don't even read or speak English and can't even stand the process of being granted an IPA certification and or trading license. 

In 2023, the PNG parliament passed a law intended to prevent foreigners from operating small businesses that are reserved for indigenous Papua New Guineans.

The updated investment law included measures to ensure locals remain in control of businesses such as general stores and taxi and bus services without discouraging other foreign investment.

It followed a public outcry that local businesses face increased competition from Asian migrants. 

Local media reported Prime Minister James Marape saying “It’s time our people [sat] in the driver’s seat."

Dozens of business activities, from small-scale farming to owning a security guard company, are reserved for citizens under Papua New Guinea’s 1992 Investment Promotion Authority Act, but the law has lacked monitoring and enforcement.

The updated law aims to improve compliance so local businesses are protected while still encouraging foreign investment in industries where PNG needs outside capital and expertise. 

Photo by PNG Immigration and Citizenship Authority 

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