What is a shell corporation if you have offshore workers?

Some U.S. companies set up shell corporations when they have offshore workers. And in some cases shell companies are the remnant of a previously active business that may have money or valuable tax losses that can be used by another company in the event of a merger or acquisition. Are shell corporations legal?

Why do companies use shell companies?

For example, a new startup can use a shell corporation to store the money it’s raising before it officially launches. A company that’s preparing to go through a merger or an acquisition can save its assets in a shell company to simplify matters. Corporations can also use shell companies for security reasons.

Which companies use shell corporations for legitimate reasons?

An example of companies using shell corporations for legitimate reasons can be seen in the case of Sega Sammy Holdings. In June 2013, when Sega Sammy Holdings purchased the bankrupt Index Corporation, a shell corporation called Sega Dream Corporation was formed.