close corporation financial definition of close corporation. close corporation finance term by the Free Online Dictionary.

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.

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