Shell Corporation

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DEFINITION of 'Shell Corporation'

A corporation without active business operations or significant assets. Shell corporations are not necessarily illegal or illegitimate, as they often serve an important for potential startups. Additionally, shell corporations can act as a tax avoidance for legitimate businesses.

BREAKING DOWN 'Shell Corporation'

Shell corporations are often formed before commencing operations to obtain financing. Sometimes, they may be used as a front in tax evasion. Shell corporations however are legal entities in most countries, although they have been known to be used in black or gray market activities. They should not be confused with dummy corporations however, as those are created specifically for the purposes of illegal activity.

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