closed corporation

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Related to Closely Held Companies: Public corporation, Privately held companies

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 ?
Given the centrality of financial reporting integrity, why should closely held companies and their CPAs have a different set of rules?
The most likely users of audited financial statements of closely held companies are also likely to have requested the audit; for example, financial institutions that loan the company money.
Fifty-six replies were received; of those that responded, 85% reported that over 75% of their loans were to closely held companies.
CPC tracks developments affecting private and closely held companies, promotes information exchange among interested members and oversees the development of programs, products and services that address its constituents.
Additionally, CPC is authorized to formulate FEI position statements on matters affecting private and closely held companies and communicate those positions to appropriate sources: organizations, government agencies, the academic community and other external interested parties.
In addition to potential problems with information availability and reliability, there are other differences between closely held companies and their publicly traded counterparts.
Many closely held companies are run by a very thin management layer.