Shell company

A shell company is a registered legal entity with no active business operations, employees, or substantial assets. It typically exists only on paper and may serve legitimate purposes such as holding investments, facilitating mergers, or protecting intellectual property. However, shell entities are sometimes misused for concealing ownership structures, transferring illicit funds, or evading taxes through complex financial arrangements.

Example: An investor might establish a company in an offshore jurisdiction to hold assets or investments. If the entity conducts no real business and is used solely to obscure the origin of funds or shift profits to a low-tax region, it would be considered a shell company for tax avoidance or money-laundering purposes.