Editing Shell corporation (section)

{{short description|Company with few, if any, actual assets or operations}}
{{distinguish|Shelf corporation}}
{{redirect-multi|2|Shell (company)|Shell company|the energy company|Shell plc}}
{{Use dmy dates|date=March 2018}}

{{Companies law}}
A '''shell corporation''' is a [[company]] or [[corporation]]  with no significant assets or operations often formed to obtain financing before beginning business. Shell companies were primarily vehicles for lawfully hiding the identity of their beneficial owners, and this is still the defining feature of shell companies due to the loopholes in the global corporate transparency initiatives.<ref name="auto">{{cite book |last1=Murat Can |first1=Pehlivanoğlu |title=Paravan Şirket (Shell Company) |date=2023 |publisher=On İki Levha Yayıncılık |location=Istanbul |isbn=978-625-432-623-3}}</ref> It may hold passive investments or be the registered owner of assets, such as [[intellectual property]], or ships. Shell companies may be registered to the address of a company that provides a service setting up shell companies, and which may act as the agent for receipt of legal correspondence (such as an accountant or lawyer). The company may serve as a vehicle for business transactions without itself having any significant [[asset]]s or operations. 

Shell companies are used for legitimate purposes but can be used for [[tax evasion]], [[tax avoidance]], [[money laundering]], to dodge current or future [[Lawsuit|lawsuits]] or to achieve a specific goal such as [[anonymity]]. Anonymity, in the context of shell companies, relates to anonymity of beneficial owners of the company.<ref name="auto"/> Anonymity may be sought to shield personal assets from others, such as a spouse when a marriage is breaking down, from creditors, or from government authorities.

Shell companies' legitimate business purposes are, for example, acting as trustee for a trust, and not engaging in any other activity on their own account. This structure creates [[limited liability]] for the trustee. A corporate shell can also be formed around a partnership to create limited liability for the partners, and other business ventures, or to immunize one part of a business from the risks of another part. Shell companies can be used to transfer assets from one company into a new one while leaving the liabilities in the former company. Shell companies are also used for privacy and security reasons by wealthy individuals and celebrities.<ref name="auto"/> Accordingly, shell companies may be used to generate both pecuniary and non- pecuniary private benefits by their beneficial owners.<ref>{{cite book |last1=Pehlivanoğlu |first1=Murat Can |title=Non-Pecuniary Private Benefits in Publicly Traded Corporations How Involuntary Dissolution Statute May Be the Solution |date=2024 |publisher=Brill Nijhoff |location=Leiden |isbn=978-90-04-68651-9}}</ref>