A shell corporation is an entity with no significant assets or business operations. There are a number of reasons for having a shell corporation, including the following:
- It has just been formed and is being used for the collection of financing before acquiring assets and starting operations.
- It was an active public company at one time, and has been pared down for later use as a public shell company to take another business public.
- It is being used as a vehicle for tax avoidance.
- It is being used to engage in financial activities in other countries.
- It has been created as a ploy by a fraudulent operator, who uses it as a front to attract funds and other payments from third parties.