Shell Corporation Law and Legal Definition

A shell corporation is a company which serves as a vehicle for business transactions without having any significant assets or operations. Shell corporations are not illegal and they may have legitimate business purposes. They are also known as international business corporations (IBCs), personal investment companies (PICs), front companies, or mailbox companies.

An example of a legal use of a shell company is a supplier of store brand groceries that sets up a shell company when dealing with hard discounters. By concealing its business relation with the discount chain, the supplier prevents diluting the value of its main brand which sells at higher prices.