PDSnet Glossary

Term

Categories

Introductory Technical Fundamental Economics Opinion Sectors International Regulatory Other Markets

Versions

Name	synonyms = 1, variations = 2, abbreviations = 3

Publish: (0 = no, 1 = yes)

Definition

A company which has cash or near-cash as its only asset. Besides the income derived from investing this cash, these companies have no income-producing assets and are not conducting normal business in any industry. When a company becomes a cash shell (i.e. all the assets are sold off or transferred out leaving only cash in the company), it remains listed for a period of six months, during which time it must acquire viable assets and comply with the initial listing requirements of the JSE. The shares can be traded during this six-month period, but if at the end of this period the company has not acquired any viable assets, the share is suspended for a further three months. After this period, if it is still not compliant, its listing is terminated. They are often the subject of take-over bids by companies wishing to obtain a listing. Take-overs like these are often accompanied by considerable insider trading (which is illegal). This shows in the volume of shares traded before the take-over is announced to the general public. These high volumes are a good indicator of an impending take-over, but sometimes reflect a wild rumour in the market.

Edit Glossary Term