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 ?
However, this mechanism is not available for closely held companies that issue ESOs.
For example, they should neither discriminate against, nor unduly favour, investment in closely held companies compared to investment in other firms.
Many nonpublic and closely held companies issue debt with an equity kicker, such as a warrant.
The company includes a consulting division that provides business valuations, expertise with mergers and acquisitions, estate planning and estate succession issues for closely held companies.
Through careful planning, high gift and estate taxes can be minimized for the owners of closely held companies.
There are several ways minority investors in closely held companies can ensure that they are able to participate in overseeing the material operations of the business and have a voice in making other significant business decisions.
Awarding ownership to employees can be a bit more complicated for small, closely held companies. The primary difficulty, says Andrewsen, is accurately assessing the value of company shares in the absence of a fair market value.
In closely held companies, employees who receive stock must be given an option allowing them to sell the stock back to the company for fair market value during the 60-day period following the distribution and again during the 60-day period following the first anniversary of the distribution date.
Also, over time, closely held companies eventually sell, merge or go public, and the Simplot company was experiencing increased competition.
Another difference lies in the options for financing and structuring acquisitions for closely held companies. Stock-for-stock swaps are rare, and access to initial public offering funds or other large pools of money is limited.
Headquartered in Oakbrook Terrace, Illinois with offices in Atlanta, Boston, Chicago, Cedar Rapids and Louisville, the company is a leading advisor to closely held companies nationwide.
Thursday, January 3, 2013, “New Medicare Tax Impact on Business Planning for Closely Held Companies - A National Perspective”