What is a shell company?

Shell companies, also known as ready-made companies or paper companies, refer to companies that have been registered but have not yet carried out any business activities. Usually, such a company has not appointed the first director, and no investors subscribe for shares, so it does not involve business and creditor's rights and debts. There may be various reasons for the existence of shell companies, such as the urgent need for registered companies to sign contracts or handle other businesses, or as backup companies to meet unexpected needs. In addition, it is also possible to use shell companies to register trademarks at low cost and then transfer them to enterprises or individuals who need the trademarks. It should be noted that although the shell company itself is a legal entity, in some cases, the shell company may be used for illegal purposes prohibited by law, such as money laundering or tax evasion.