The multi-agency committee constituted by the Government of India in July 2018 is struggling to finalise the definition of a “shell company” for the purposes of enforcing penal laws for various violations.
About:
The term “Shell Company” is undefined in the Companies Act, 2013.
But generally, these are seen as bogus entities that do not produce anything but are used as a channel to evade tax.
Reasons for setting a shell company:
These types of corporations are not all necessarily illegal, but they are sometimes used illegitimately, such as to disguise business ownership from law enforcement or the public.
Legitimate reasons for a shell corporation include such things as a startup using the business entity as a vehicle to raise, funds, conduct a hostile takeover or to go public.
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