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 by legitimate businesses, but they are also sometimes associated with illegal activities like tax evasion or money laundering. Shell companies can be registered in jurisdictions with lenient regulations, making it easier to maintain anonymity. While they can serve legitimate purposes, their lack of transparency can raise concerns among regulators and the public, especially when linked to tax havens or financial crimes.