Shell Company Meaning [Corporate Structures]

In this article, we’re sharing a shell company meaning that doesn’t get enough attention, which is the legitimate and legal use of a shell company.

This article is part of our free series on business banking, including how to find the best bank to open a business account in top jurisdictions around the world.

Feel free to use the table of contents to jump ahead to the sections most relevant to you.

Table of Contents

  1. Shell Company Meaning
  2. Who Are Shell Companies For?
  3. Shell Company vs Dormant Company
  4. Frequently Asked Questions
  5. Do You Want Help Opening Bank Accounts?

Shell Company Meaning

A shell company, meaning a company that is registered but does not currently operate, can be obtained in almost any jurisdiction. Shell companies can include private and public companies, previously operational companies, as well as companies that have never operated before.

Who Are Shell Companies For?

Shell companies are for anyone who wants access to the specific benefits that they offer. That said, the benefits of a shell company will vary depending on where they are registered. For example, shell companies that are registered in offshore jurisdictions like the British Virgin Islands may have enhanced privacy and tax advantages, while shell companies registered in onshore jurisdictions like the United States may offer access to sophisticated financial services and investment opportunities.

Shell Company vs Dormant Company

The main difference between a shell company and a dormant company is that a shell company is maintained in good standing with its corporate registrar even though it has no operations while a dormant company is no longer in good standing with its corporate registrar in addition to not having operations.

Is a Shell Company Legal in India?

Yes, owning a shell company is legal in India. In fact, a shell company is simply a company that does not yet operate. However, a shell company may also include companies that have been set up for investment purposes, to hold non-operating assets on behalf of individuals and companies, or to facilitate payments in foreign countries. Of course, a shell company may also be used for asset protection purposes and to increase personal privacy, which is also legal.

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Frequently Asked Questions

Below are a few of the most common questions we receive from people looking into the meaning of a shell company. If you have further questions you would like to ask our team, don’t hesitate to get in touch.

How Are Shell Companies Used in India?

Shell companies are used in India for a number of reasons, including to facilitate investments domestically, facilitate investments internationally, obtain tax efficiency benefits for corporations and individuals, and even to expedite corporate registration in various countries.

Do Shell Companies Make Money?

No, shell companies do not make money directly. However, depending on why and how a shell company is being used, it is possible that they will receive payments, distributions, or other dividends. That said, when shell companies hold shares or other investments, they are a holding company.

How Much Does It Cost to Open a Shell Company?

How much it costs to open a shell company does depend on the jurisdiction where you choose to incorporate. Not surprisingly, shell companies are more expensive to register in certain jurisdictions than others. For example, in the British Virgin Islands, a shell company may cost around USD 2,000 to register. However, in other jurisdictions, like the United States it may cost less than USD 1,000.

What Is an Illegal Shell Corporation?

An illegal shell corporation may refer to a corporation that has failed to meet its filing obligations or has in some way participated in illegal activities. However, shell corporations are not illegal. In fact, a shell corporation may have legitimate uses. These uses include supporting business interests, investments, or simply expediting corporate registration in various jurisdictions.

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