The shell company has what you want, an AIM quote, and, in some cases, cash as well. The shell route can thus save time and, in some cases, give you access to a new group of investors.

The standard procedure in this instance is for the shell company to issue shares to your company in what is formally defined as a ‘reverse takeover’, giving your company control and, if the AIM authorities approve, a share listing. Usually, the old shareholders of the shell company would be left with a small minority holding.

You would then change the name of the company, either to that of your original company or another one.

Floating through a company that has turned itself into a cash shell – after losing its way in some other business – requires careful checking first. Some can prove less ‘clean’ than you hoped and saddle you with disgruntled minority shareholders, potential creditors, joint venture partners, customers and other unwanted baggage.

Last year, AIM tightened the rules on shells, or ‘investment companies’, many of which had been floated by entrepreneurial figures such as Stephen Dean, Leo Knifton and Nicholas Greenstone. Under the new regime, any shell that joined AIM before April 2005 and raised less than £3 million had two choices.

By 1 April this year, it either had to make a reverse takeover that qualified as such under AIM rules or ‘satisfy’ the AIM authorities that it had otherwise implemented its stated investing strategy. As a result, 38 out of 120 quoted shells exited from AIM, some later returned after doing deals and 87 are now quoted.

ImmuPharma floated on AIM this way in January, when General Industries, created by entrepreneur Richard Wollenberg as a cash shell to acquire a cash-hungry business poised to float, bought it for shares.

That deal gave ImmuPharma’s owners 86.7 per cent of General Industries. It was accompanied by a £2 million share placing.

It is not always plain sailing. Gerry Orbell, who listed Sound Oil as a cash shell looking for exploration deals, recalls, ‘We had to go through the diligence and all the rest of it to get listed as a financial company, as cash shells are.

‘Then, when we found a deal, in Indonesia and Bangladesh, we had to move to the resources list and go through the whole process all over again, with a competent person’s report on the projects involved. I had to spend 40 per cent of my time with financial advisers.

More on Cash Shells:

Cash shells: AIM’s best-kept secret – Of the 16 cash shells afloat on AIM in 2008, five have completed reverse deals, two have taken on operating businesses, two have been bought, five are still on AIM seeking reverse acquisitions and two have delisted.

Cash shells on London’s markets – Nearly £230 million is now sitting in cash shells waiting to find a home. Todd Cardy investigates how to secure some of these elusive funds and speaks to those who have.