closely held corporation


Also found in: Dictionary, Thesaurus, Legal, Acronyms, Wikipedia.
Related to closely held corporation: private corporation

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.

closely held corporation

See close corporation.

References in periodicals archive ?
applied to closely held corporations such as Hobby Lobby and Conestoga,
This support only boosted the logical conclusion that the Dictionary Act had already provided that closely held corporations are considered persons under the Act.
while dividend payments are not.) (18) In a closely held corporation
* Marketable, noncontrolling ownership interest (e.g., as if the closely held corporation stock was publicly traded on a stock exchange)
In Illinois, case law holds that a shareholder who owns a majority interest of a closely held corporation owes a fiduciary duty to the minority shareholders.
For instance, in a closely held corporation that has less than 10 shareholders, the corporation or controlling shareholder, to drive down the buyout price of a dissenting shareholder's shares, could simply add a few nominal shareholders, thereby taking the corporation over the threshold 10 shareholders number, which would then allow a significant reduction in the dissenting shareholder's buyout price.
(52) In these situations, particularly in closely held corporations, where the mere presence of a disinterested director will not overcome strict dominance, the legal decision to run the statute of limitations should not depend on such a singular presence.
Following a discussion of the probate process, the authors discuss business continuation issues for each form of business from proprietorship to the closely held corporation. This is followed by a discussion of postmortem estate preservation planning topics.
Redeeming shareholders in closely held corporations may now face legal challenges from creditors attempting to unwind stock repurchases on two fronts: (1) If a corporation makes a distribution while insolvent, or the distribution impairs its capital, the transaction may be attacked under state law; and (2) Where a stock redemption provides for delivery of a promissory note by the corporation, the balance owing on the promissory note may be equitably subordinated later -- even years later -- should the corporation file bankruptcy, notwithstanding the corporation was solvent at the time of the stock repurchase.
The booklet discusses many other legal issues of a closely held corporation.
Under this position, the value of shares in a closely held corporation is determined not by reference to what the particular shares would fetch in a hypothetical market sale, but instead by valuing the company as a whole and by ascribing to each share its pro rata portion of that overall enterprise value.
Justice Samuel Alito, writing for the court's majority, said protecting the religious rights of closely held corporations, which are often small, family-run businesses, ''protects the religious liberty of the humans who own and control them.''