What are shell companies?

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

http://www.stayfoolish.in

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