closely held corporation

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Related to closely held corporation: private corporation

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 corporation

See close corporation.

References in periodicals archive ?
In 1993, a bankruptcy court sitting in Illinois wrote that "shareholders in a closely held corporation owe a fiduciary duty to deal with the utmost good faith, fairly, honestly, and openly with their fellow stockholders.
A closely held corporation will be treated as materially participating if one or more of the shareholders, holding more than 50% of the stock in the corporation, materially participates in the activity.
In third-party transfers involving closely held corporations, the scenario changes.
a 100%-owned closely held corporation, equally between A and B.
These increasingly popular restrictive agreements can be valuable tools to closely held corporations that seek to protect shareholder ownership interests and increase the probability of achieving a long and successful operating life.
Basically, a buy-sell agreement is a contract, either between a closely held corporation and its shareholders, or among the shareholders themselves, to buy and sell stock at a predetermined price when a specified event occurs, such as the death of a shareholder.
Minority shareholders in a closely held corporation often are at a distinct disadvantage.
Shifting control of a closely held corporation can be accomplished in several ways, including redemptions, stock sales or gifts.
Lehn is Certified by the Supreme Court of New Jersey as a Civil Trial Attorney and practices in the areas of commercial litigation, franchise and employment law, legal malpractice real estate and litigation involving closely held corporations.
It is not unusual for small, closely held corporations to secure their initial capital entirely from a bank or other third-party financing, secured by the shareholders' personal guarantees.
Employer contributions to QTPs may be attractive for closely held corporations.