The history of Blank Check Companies is relatively old in the US, but is nascent in India. The article takes a closer look at these companies.

Of late the term "Blank Check Companies" is hitting the heading of almost all the financial dailies. But what is a Blank Check Company? A Blank Check Company refers to a company in the developmental stage that has no specific established business plan, yet. The term generally applies to a shell company with limited or no employees, little or no physical assets and no products and with only a business plan to merge with or acquire some unidentified company or companies. A shell corporation is defined in the Barron's Finance and Investment Hand book as "a company that is incorporated but has no significant assets or operations".

Blank Check Company is not a new concept. It worked well in the United States in the mid-1980s. However, as far as India is concerned, they are the newest entrants into the Indian business space.

These very small companies typically involve speculative investments and often fall within the US Securities and Exchange Commission's (SEC) definition of penny stocks or are considered micro cap stocks. According to the financial markets in US the term "penny stock" refers to any stock trading that is conducted outside one of the major exchanges and is often considered negative. Micro cap stock refers to the stock of a company whose market capitalization is under US $100 mn.

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