Shell corporation - Definition

For the oil company, see Royal Dutch-Shell.

A shell corporation is defined in Barron's Finance & Investment Handbook as "a company that is incorporated but has no significant assets or operations. Such corporations may be formed to obtain financing prior to starting operations.... The term is also used of corporations set up by fraudulent operators as fronts to conceal tax evasion schemes." They are also known as Specified Purpose Acquisition Companies (SPACs).

Shell corporations may be used to launder and recycle money from the hidden face of the world economy. They take advantage of the existence of 250 free zones and tax havens, 95% of which are former British, French, Spanish, Dutch or U.S. colonies or concessions that remain dependent on the former colonial powers.

Shell corporations are not in themselves illegal, and they may have legitimate business purposes.

See also

• Holding company
• Front organization

Example Usage of corporation