Close corporation

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Business Definition for: close corporation
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CLOSE CORPORATION - A corporation with relatively few shareholders and no regular markets for its share...
CLOSE MARKET - An market in which there is a narrow spread between bid and offer prices, due to a high ...

Close corporations issue stock, but the amount of shareholders is greatly limited, usually to less than thirty. Given the small number of shareholders, normally all are involved in board-level decision making.

Close corporation: a public corporation in which all of the voting stock is held by a few shareholders, for example, management or family members.

Close corporations issue stock, but are limited to the amount of shareholders involved. This is normally nor more than thirty.

close corporation plan An arrangement whereby surviving shareholders agree to buy a deceased shareholder's shares. close market A market with a narrow spread. Opposite of wide market.

Close corporation: Corporation with less than 50 shareholders that has elected to be treated as a close corporation. Not all states have close corporation statutes.

Only near midcentury did state legislatures grudgingly begin enacting 'close corporation' statutes for businesses that would be organized as partnerships if courts were willing to recognize the contractual nature of limited liability.

Appraisal Rights. The rights of shareholders in a merger or acquisition by another party to demand payment at a fair price determined by an independent appraisal. Often raised by minority shareholders in close corporations.

See also: Acquisitions, Mergers, Proprietorship, Personal finance, Sole proprietorship