A shell has a ticker, a filing history, and little else. Legitimately, a private company can use one to go public through a reverse-merger instead of an ipo. Illegitimately, dormant shells are the vehicle of choice for pump-and-dump promotions because the tiny float makes the price easy to move.
Regulators restrict shells: shares issued by them do not qualify for the usual resale exemptions until the company has filed full current information for a year.
Example: a dormant shell with 4M shares issues 96M new shares to a private target's owners. The old holders keep 4% of a new company, and the effective valuation of what they held was set entirely by the deal terms.
Related: reverse-merger, pump-and-dump, otc-markets