close corporation

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Related to close corporation: Private company

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.

close corporation

A corporation comprised of a small number of individuals who contribute to the success of the business operations. Also called closely held corporation. Stock in close corporations is typically sale-restricted, so that shares must be first offered to the corporation or to the other shareholders before they can be sold to outsiders.Sale restrictions must be noted on the face of stock certificates, putting buyers on notice that an attempted sale may be void if all requirements have not been met.

References in periodicals archive ?
That a professional who resigns from the corporation could well be left in the unfortunate position of owning unmarketable shares of stock is generally true of the minority shareholders in all close corporations.
A corporation does not have to be incorporated as a statutory close corporation for shareholders to owe fiduciary duties.
In order to receive favorable taxation, the statutory close corporation can decide whether to be taxed under subchapter C or subchapter S of the IRS code.
Moll, Shareholder Oppression and "Fair Value": Of Discounts, Dates, and Dastardly Deeds in the Close Corporation, 54 DUKE L.
As the court explained, "[b]ecause of the fundamental resemblance of the close corporation to the partnership, the trust and confidence which are essential to this scale and manner of enterprise, and the inherent danger to minority interests in close corporation," the "stockholders in a close corporation owe one another substantially the same fiduciary duty (22) in the operation of the enterprise that partners owe to one another.
People such as Hodge O'Neal meticulously studied how, for example, shareholders might be oppressed within the close corporation (202) and identified strategies to counter such oppression.
The previous discussion suggests little reason to expect promulgation of close corporation statutes, much less the evolution of efficient close corporation statutes.
The Montana Close Corporation Act allows small Montana companies to incorporate without having to form a board of directors or conduct annual meetings.
Cohan, whose background before becoming a general counsel was primarily in estate planning as well as real estate and counseling close corporations, says once he became general counsel for a small company his work unexpectedly became far more business than legal.
Thus, a sale-and-leaseback with a controlling shareholder can be a viable strategy for a close corporation in need of cash.
Energokomplekt-Perm Close Corporation works as a large-scale systems integrator and realizes a comprehensive approach to provision of the Customer's objects for engineering systems and energetic equipment.