closed corporation

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Related to Close Corporations: closely held corporation

Closed corporation

A corporation whose shares are owned by just a few people, having no public market.

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.

closed corporation

References in periodicals archive ?
Using the freedom of contract afforded close corporation shareholders to negotiate stock purchase and shareholder agreements, venture capitalists appear effectively to have resolved many of the traditional problems of close corporations.
15) Statutory forms such as the close corporation compete with non-statutory business forms, which, in turn, compete across jurisdictions through the use of contractual choice of law clauses.
Taken together, the statistics suggest that most oppression actions have been brought by minority shareholders of close corporations.
1993) ("Shareholders of close corporations are often family or close friends.
Delaware's provisions were optional: an eligible company had to opt into them by filing with the Secretary of State as a close corporation covered by the statute.
Aside from the particular context of minority shareholders in close corporations, we argue that they would not and, therefore, such an overarching default rule in corporate law is inefficient.
Fischel, Close Corporations and Agency Costs, 38 STAN.
Wright called the Fund as the only viable financier with an evaluation model and risk appetite in place to offer funds to close corporations.
Company registrations, mainly close corporations, increased by 11%.
restrictions3 in the corporate documents (4) of close corporations (5)
94) In fact, South Dakota business judgment rule precedent recognizes a presumption in favor of directors in close corporations.