close corporation


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Related to close corporation: Private company

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.

close corporation

A corporation comprised of a small number of individuals who contribute to the success of the business operations. Also called closely held corporation. Stock in close corporations is typically sale-restricted, so that shares must be first offered to the corporation or to the other shareholders before they can be sold to outsiders.Sale restrictions must be noted on the face of stock certificates, putting buyers on notice that an attempted sale may be void if all requirements have not been met.

References in periodicals archive ?
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.
The "reasonable expectations" rubric has lessons outside the close corporation setting.
Moll, Shareholder Oppression and "Fair Value" Of Discounts, Dates, and Dastardly Deeds in the Close Corporation, 54 DUKE L.J.
If the failure of the minority owners to plan for dissension was due to problems with the close corporation structure itself e.g., if contracting around the majority role norm was prohibited under corporate law the freedom of contract provided by LLC statutes would arguably diminish the need for a judicial oppression doctrine....
(11.) See Hagshenas at 69, 557 NE2d at 322 ("We believe that, though [the corporation] was not organized or registered as a close corporation under the Close Corporation Act, for all practical purposes it acted as a close corporation.").
This document explores the requirements for enforcement of shareholders' agreements in the context of the close corporation. Chapter II will present a basic approach to the internal affairs doctrine and the concept of close corporation.
In order to form as a statutory close corporation, the entity may not have more than a specified number of shareholders as mandated by the state.
Indeed, Delaware, like most states, has a specialized close corporation statute.
By requiring that the plaintiff prove the stricter test of complete dominance, the court has effectively precluded the tolling of the statute of limitations in close corporation cases.
In the application Pan Fish underlines its commitment to create a close corporation with Norwegian research and authorities to create a long-term positive development when it comes to the industry development, value creation and impact on job creation.
(15) The court agreed with the minority stockholder and, noting the distinguishing characteristics of closely held corporations, held that the stockholders in a close corporation owed each other the same fiduciary duty as is owed by one partner to another in a partnership.