A shell corporation is a company which does not have its own business or operations, but is only used as a vehicle for investment, accounting, legal purposes, or facilitating the delivery of goods and services by other companies.
Typically, a shell corporation has few or no employees, and may not have a physical office. Its registered address may be with a third-party company which provides shell corporation services, or in some cases simply a PO box.
Special purpose acquisition companies (SPACs) are one form of shell corporation. These only exist to facilitate access to stock exchanges for real businesses, but have no business operations of their own.
Shell corporations are typically set up by companies to manage business which would be more complicated or expensive to manage themselves. In some cases, companies set up shell companies to mitigate risk. For example, a company may set up a shell corporation to manage a business venture which has a high risk of failure and could jeopardize its creditworthiness.
While shell corporations play an important role in global commerce, they have long been the subject of controversy. Most controversy surrounding shell corporations center on their use as tax optimization vehicles and misuse for tax avoidance.
