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blank-check company

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Financial Dictionary

Blank-Check Company

A company in a developmental stage that either doesn't have an established business plan or has a business plan that revolves around a merger or acquisition with another firm.

Investopedia Commentary

These companies are generally speculative in nature and will issue penny stock in order to finance future operations.

According the Securities Act of 1933 (under Rule 419), blank-check companies are required to disclose the terms and conditions of their offering as well as place any funds received from the offering into an escrow account.

Related Links

The Lowdown On Penny Stocks
The Basics of Mergers and Acquisitions

See also: Acquisition, Blank Check Preferred, Development Stage, Escrow, Merger, Penny Stock, Speculation

Investopedia.com. Copyright © 1999-2005 - All rights reserved. Owned and Operated by Investopedia Inc.
Cite This Source
Ellenoff Grossman &Schole
#2 Ranked SPAC Law Firm. Review in English, Chinese, Hindi, or Hebrew.
www.EGSllp.com
Business Check Template
Get a Business Checking Account & Check Card That Save You Money.
www.BankofAmerica.com/SmallBusiness
Financial Dictionary

blank-check company

A company that issues penny stock in order to finance its involvement in establishing a business in which principal operations have not yet commenced. The company either has no business plan or plans to engage in a merger or acquisition with an unspecified business entity. Essentially, the company is given a blank check with regard to investors' money. Blank-check companies are required to provide certain information prior to and after the registration of securities. In addition, funds received from a penny stock offering must be placed in an escrow account for the benefit of the purchaser. See also Rule 419.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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