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.