As defined in Rule 405 under the Securities Act and Rule 12b-2 under the Exchange Act, a company (other than an issuer of asset-backed securities) with no or nominal operations that has any one of the following:
No or nominal assets.
Assets consisting solely of cash and cash equivalents.
Assets consisting of any amount of cash and cash equivalents and nominal other assets.
Shell companies are restricted from using certain forms and taking advantage of certain conveniences under the federal securities laws. For example, shell companies are not permitted to use Form S-8 and shell companies are considered ineligible issuers that cannot use free writing prospectuses for communications during a registered offering. These restrictions are designed to prevent the use of shell companies in committing fraud and other abuses in the securities markets.
