shell company
SHEL KUM-puh-nee
/ˈʃel ˌkʌm.pə.ni/
A company that at the time of incorporation has no significant assets or active business operations.
While not always illegal, they are frequently used in white-collar crime to hide the true ownership of money or to facilitate money laundering.
The story behind the word. The term suggests an empty 'shell'—something that looks like a corporation from the outside but has nothing inside. It became widely known during the financial scandals of the late 20th century.
Word relationships
- front company: A front company has a real business to hide illegal activity; a shell company has no real business at all.
- operating company: A company that is actively involved in business operations and has employees and assets.
Commonly confused with
- holding company: A holding company is a legal entity that owns other companies; a shell company is an empty entity used to hide assets.
Collocations
- offshore shell company
- anonymous shell company
- set up a shell company
Example sentences
- "The Panama Papers revealed the widespread use of shell companies by world leaders to hide their wealth in offshore tax havens." A report on offshore finance.
- "A shell company is a business that exists only on paper and has no office or employees, but may have a bank account." A definition from a financial site. (Investopedia)
Memory hook
A shell company is like an empty eggshell: it looks like a whole egg, but there's nothing inside. An empty shell with a name on it.
When not to use
Do not use for a 'startup' that is actively trying to build a business, even if it has no assets yet.
Fun facts
- Delaware and the Cayman Islands are famous for having more registered shell companies than actual residents.
Related words
Explore more words
money laundering, laundering, pyramid scheme, Ponzi scheme, trafficking, Share
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