closely held corporation


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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 ?
designed to make clear that shareholders of a closely held corporation,
24) They observe that fiduciary duties between shareholders in a closely held corporation are necessary "because while a closely held corporation embodies the corporate form, it in many ways resembles a partnership.
The focus of this article is on the treatment of passive losses by closely held corporations.
IN CASES INVOLVING DIVORCING SPOUSES WHO OWN closely held corporations, the courts have had conflicting opinions about the tax consequences to the spouses if the corporation, or one spouse, redeems the other's stock.
The operation of most buy-sell agreements in closely held corporations is fairly straightforward.
Basically, a buy-sell agreement is a contract, either between a closely held corporation and its shareholders, or among the shareholders themselves, to buy and sell stock at a predetermined price when a specified event occurs, such as the death of a shareholder.
Minority shareholders in a closely held corporation often are at a distinct disadvantage.
It is not unusual for small, closely held corporations to secure their initial capital entirely from a bank or other third-party financing, secured by the shareholders' personal guarantees.
Employer contributions to QTPs may be attractive for closely held corporations.
The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) reduced the individual tax rate on corporate dividends received to 15% for individuals in the 25%, 28%, 33% and 35% tax brackets (5% (0% in 2008) for individuals in the 15% and 10% income tax brackets); this affords some planning strategies for closely held corporations that want to reduce their accumulated earnings and profits (E&P).
Of course, in some closely held corporations, the wage-earning shareholders have substantial discretion in determining their own salaries.