Closely held


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Related to Closely held: Closely held company

Closely held

A corporation whose voting stock is owned by only a few shareholders.

Closed Corporation

A company in which a small group of shareholders controls the majority of the shares. These majority shareholders tend to hold on to the company's stock, and, for that reason, only minority shares are traded, leading to light trade volume. Closed corporations are, by their nature, resistant to hostile takeovers and proxy wars. They tend to be more stable than other companies because their share prices are not determined by (sometimes irrational) investment decisions, but by the value of the company itself. However, closed corporations do not have access to as much working capital as corporations with more shareholders. They are also called closely held companies.

Closely held.

A closely held corporation is one in which a handful of investors, often the people who founded the company, members of the founders' families, or sometimes the current management team, own a majority of the outstanding stock.

References in periodicals archive ?
This article analyzes the fiduciary duties among shareholders of the closely held corporation.
32) One reason why the 3:12 Study was commissioned was to review and simplify the rules applicable to owners of closely held firms.
When cash is transferred to a closely held corporation, is the transfer a loan or a capital contribution?
This pattern is repeated in the section on closely held corporation statutes: "A minority of states have adopted special provisions in their corporate statutes dealing with closely held corporations.
However, closely held stock usually does not have a readily ascertainable FMV: There may be only a few shares, they may not be widely traded (and, indeed, may never have been traded), and only a few family members may be holding them.
Many nonpublic and closely held companies issue debt with an equity kicker, such as a warrant.
When a closely held corporation is a significant part of a couple's assets, typically the divorcing spouses agree the business should be 100% owned by the spouse who is active in running the business.
Establishing a reasonable compensation level is a not a science, especially when it includes a contingent compensation arrangement in a closely held corporation.
With adequate documentation, it is possible for a closely held company to fully compensate shareholder-employees without having part of the payment reclassified as a disguised dividend.
Although we are a boutique firm, Strategic Equity Group's access to a vast network of potential buyers, both institutional and industry-specific, and other advisors and intermediaries across the country, means that SEG can bring muscle and clout into a deal involving closely held companies," noted Ellington.
This rule applies to all gifts, but its effect is especially severe for a non-readily marketable asset (such as a closely held business interest); years later, the IRS could increase its value, resulting in an unexpected (and unwelcome) tax bill.
Valuing stock in a closely held corporation is always difficult for CPAs.