Dummy corporations are entities or fake companies used as a cover for a corporation. It will have a complete appearance of a working company, but is actually unable to function independently. It is mainly created to protect a corporation from liability a sit deceives investors. It also is a tactic in hiding a company’s loss and safeguard an image of their real company.
In order to understand if a company is genuine or a dummy, you should understand how it is set up. Dummy corporations are set up in the following manner:
- A dummy company will be set in the same way as an actual one is set, but it will have an absence of operations in it. The type of business for the corporation will be highlighted first.
- The name of the dummy company will then be formed. The name of the company will be viable with a large business.
- Since the dummy company will be a cover up for an actual company, it will have a fake business plan. If it is opened by a known company, it will share the same plan to stay safe. The business plan of the dummy company will cover all the equipment and expenses it has carried and the number of employees in it. Usually, these are all over exaggerated for company image.
- Locations of dummy companies are usually in foreign lands for large corporations so that no one gets suspicious.
- These companies are registered like real companies, and have a license.
- A staff and furniture is set by the company, giving a real look. But no actual work is being performed by it.