closed corporation

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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 ?
Alternative Structures for the Sale of a Closely-Held Corporation
This tax structure clearly contrasts with the sale of assets where the seller corporation is taxed on the business sale and the closely-held corporation shareholder is also taxed on the distribution of the business sale proceeds.
Sam has a basis of $1,000,000 in his stock in this closely-held corporation.