Shell companies

Shell companies (sociétés écrans or sociétés coquilles) are legal entities with no genuine operational activity, typically created to conceal ultimate beneficial owners, obscure ownership structures or facilitate opaque tax or financial arrangements. Anti-money laundering regulations (Swiss AMLA, EU 6th AML Directive) require declaration of ultimate beneficial owners (UBO). In M&A, the presence of shell companies in a target's ownership chain is a major red flag requiring enhanced KYC investigation and, potentially, refusal of mandate.

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Example: KYC on a prospective buyer in a Swiss sale reveals the acquirer is a Cayman Islands company with no declared operations, itself owned by a Belize entity whose UBO is unknown. This shell company structure leads to suspension of the mandate and a demand for full UBO disclosure — in compliance with Swiss AMLA obligations that cannot be waived regardless of the transaction's commercial interest.

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Hectelion applies strict KYC procedures to identify shell company structures and will not accept mandates where ultimate beneficial owners cannot be clearly established.