Closed Corporation

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Closed Corporation

A type of business corporation that is owned and operated by a small group of people.

A closed corporation is also known as a close corporation, a family corporation, an incorporated partnership, and a chartered partnership. In this type of corporation all of the functions are usually performed by the same parties. These individuals serve as shareholders, officers, and directors and are involved in the management and operation of the business. A closed corporation differs from a publicly held corporation since its stock is neither issued nor traded to the public at large.

References in periodicals archive ?
Courts impose fiduciary duties on shareholders of closely held corporations.
22) The seventh circuit similarly held that shareholders of closely held corporations are fiduciaries of each other and must act loyally, in good faith, and honestly with the other shareholders.
Passive Activity Losses for Closely Held Corporations
Table 1 illustrates the calculation of passive loss deductions and net active income for 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.
However, when the transfer involves a third party such as a closely held corporation, the tax consequences may be less predictable.
Minority shareholders in a closely held corporation often are at a distinct disadvantage.
The operation of most buy-sell agreements in closely held corporations is fairly straightforward.
The danger is much greater in the case of a closely held corporation, in which ownership and management tend to coincide.
It was simply the bank's general policy to require personal guarantees on loans to closely held corporations.
Buy-sell agreements can benefit both surviving shareholders and a deceased shareholder's estate, by guaranteeing that stock in a closely held corporation will have buyers and will not be sold to outsiders.
Shifting control of a closely held corporation can be accomplished in several ways, including redemptions, stock sales or gifts.