Shell corporation

A shell corporation (also known as a paper company) 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 their defining feature due to the loopholes in global corporate transparency initiatives. 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 incorporation services, and which may act as the statutory agent (also known as registered agent or resident agent) for receipt of legal correspondence. The shell company may serve as a vehicle for business transactions without itself having any significant assets or operations. Shell companies are used for lawful purposes such as holding assets or tax avoidance. However, they can also be used for illegal purposes such as tax evasion, hiding stolen assets, or money laundering. Anonymity, in the context of shell companies, relates to anonymity of beneficial owners of the company. Anonymity may be sought to shield personal assets from others, such as a spouse in the event of divorce, 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...