A shell company is a business entity that exists only on paper and has no significant operations or assets. These companies are often created for various legal purposes, such as holding assets, facilitating mergers, or managing investments. They can be used in legitimate business practices, but their lack of activity can also raise concerns about transparency. Some individuals and organizations misuse shell companies to hide money or evade taxes, leading to potential legal issues. Regulatory bodies monitor these entities to prevent illegal activities, such as money laundering and tax evasion. While shell companies can serve legitimate purposes, they can also be associated with financial misconduct.