A company that has not yet defined its business operations. Blank check companies issue penny stocks; the funds raised through a blank check offering must usually be placed in an escrow account until certain conditions have been met. Because a blank check company has not begun or even defined its operations, it effectively asks investors to trust it. Blank check companies are therefore subject to extra regulation to protect these investors from the possibility that the company is a fraud. In any event, investing in a blank check company is always speculative.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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 for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.