A shell company is a company that exists but does not actually do any business or have any assets. The most interesting type of shell company (to investors) is one that has a listing. This is a listed shell, and is almost always what is meant by a reference to a shell in an investment context.
Given that it takes time and money to obtain a listing, a listed shell has significant value even if it does not have any assets. Listed shells are therefore often the targets of reverse takeovers
If your shares were issued by a reporting or non-reporting company that is now or ever has been a shell company as defined by SEC Rule 405, the Rule 144 safe harbor is available only if the issuer has fully complied with Rule 144(i)(2). Rule 405 defines a shell company as one that has: (1) no or nominal operations; and (2) either: (a) no or nominal assets; (b) assets consisting solely of cash and cash equivalents; or (c) assets consisting of any amount of cash and cash equivalents and nominal other assets. Compliance with Rule 144(i)(2) requires that a former shell company (a) must have ceased being a shell company, (b) must be subject to the 1934 Exchange Act, (c) must have filed Form 10-like information at least 12 months ago (the so-called “Super 8K”), and (d) must have filed all reports required by Rule 144(c) during the previous 12 months.
Therefore, the shell has to become active for a period in order for it to be updated and bought. Furthermore, given the fact that the "shell" will become active, the shares will begin to trade and subsquently rise in value for a period of time.
Many companies execute a reverse split after a shell is bought in order to get fresh shares. However, the r/s doesn't normally happen immediately.
People who purchase very low valued shares just prior to a shell being bought have a very good chance of making a substantial amount of money.
Timing is everything though.
Hope this helps. QR
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