Shell company
Also known as: shell corporation
A shell company is a company with no active business operations, employees, or meaningful of its own, existing mainly as a legal and corporate structure rather than an operating business. On paper it is a fully formed company, registered and often publicly traded, but there is little or nothing happening inside it.
Shell companies have legitimate uses. A private company can merge into a public shell to go public through a , avoiding the cost and complexity of a traditional . Shell structures are also used for corporate reorganizations, holding company setups, and, in the case of a , as a vehicle purpose-built to raise money and later merge with an operating business.
Shell companies are also associated with fraud, since their lack of real operations makes them useful for hiding the true ownership of , laundering money, or serving as the vehicle for pump-and-dump schemes. A publicly traded shell typically shows almost no or business activity on its financial statements, which is itself often the clearest sign that a is a shell rather than an operating company, and it is a reason to look closely at any company with a share price and market activity but little else behind it.