What are shell companies?
A incorporated company that does not has any real assets or economic value & no operations.
√ They are not likely to have any physical presence. May exist only on paper or for nameshake.
√ They can be legitimate or illegitimate.
Why are shell companies becoming ubiquitous?
√ can be used as a tool for money laundering.
√ can be used for evading taxes.
√ Terror Funding & other illegal trades: shell companies can be used to route money generated from illegal activities to formal financial institutions.
√ achieve anonymity.
√ can be used to transfer assets from one company to new company without the transfer of liabilities of the former company.
Can shell companies be legitimate?
Yes. If a company is set up but it has not started functioning officially.
Other usage: if a company has a negative reputation in the market then it can create a shell company & do operations by its name. In the market it will be known with the name of the shell company.
With Great Love,
Er. Amit Yadav