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 ?
In contrast, Delaware allowed such agreements even before the close corporation provisions were enacted.
This paper will analyze the use of the oppression action by minority shareholders in close corporations, minority shareholders in public corporations, debtholders, lenders, trade creditors, contract counterparties, involuntary creditors, employees, and the corporation itself.
For example, contract-like construction of the "bargained-for" relationship appears in the case law of close corporation law.
(23) Although shareholder agreements containing buyout options could to some extent prospectively address disputes among owners, the very nature of the close corporation's legal being--a potentially unending, evolving web of relations among investors, each striving to achieve their own ends within an everchanging business environment--often generated circumstances beyond even the most sophisticated investor's predictive powers.
enforcement of share transfer restrictions in close corporations in the
Shaver: Has South Dakota Adopted a Strict Good Faith Fiduciary Standard for Close Corporations?, 43 S.D.L.
rejecting] the majority view that equates closely-held corporations with statutory close corporations ...
At the same time, court decisions were uncertain and confusing about the validity and enforceability of shareholders' agreements in the context of close corporations (8).
Although many close corporations are small, not all are.
1957) (rebutting contemporary presumption of minimal duty between shareholders with regards to close corporations); Donahue v.
The Comment by Keith Rogers discusses Alaska law concerning close corporations, and proposes a new framework within which Alaska should consider minority-shareholder rights.
The Donahue "equal opportunity" principle rests upon three main premises: 1) the Donahue holding was explicitly limited to "close corporations"; (17) 2) Donahue likened the closely held corporation to a partnership; (18) and 3) because of the partnership analogy, Donahue warned that the fiduciary duty owed by shareholders in a closely held corporation is owed by all of the shareholders and not only majority shareholders.