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 they are sometimes associated with illegal activities like tax evasion or money laundering. Shell companies are often registered in jurisdictions with favorable regulations, known as tax havens. They may have a minimal physical presence and can be owned by individuals or other companies. While they can serve legitimate purposes, their lack of transparency can raise concerns among regulators and the public.