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.

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In the closely held corporation setting, therefore, it is sensible to

Shareholder oppression and the new Louisiana Business Corporation Act

In 1993, a bankruptcy court sitting in Illinois wrote that "shareholders in a closely held corporation owe a fiduciary duty to deal with the utmost good faith, fairly, honestly, and openly with their fellow stockholders.

Fiduciary duties of shareholders of closely held corporations

A closely held corporation will be treated as materially participating if one or more of the shareholders, holding more than 50% of the stock in the corporation, materially participates in the activity.

Section 469

In third-party transfers involving closely held corporations, the scenario changes.

Avoiding third-party transfers in a divorce

a 100%-owned closely held corporation, equally between A and B.

Breaking up is hard to do

These increasingly popular restrictive agreements can be valuable tools to closely held corporations that seek to protect shareholder ownership interests and increase the probability of achieving a long and successful operating life.

Buy-sell agreements--an invaluable tool

For owners of a closely held corporation, a buy-sell agreement may be the most basic and the most important element in their estate planning arrangements.

Buy-sell agreements and estate planning

Accordingly, it remained available to a cash-basis individual selling stock of a closely held corporation, regardless of whether the corporation was a cash- or accrual-method taxpayer.

Congress reinstates installment method for accrual-basis taxpayers

The first step in the process of valuing a stock interest in a closely held corporation is valuing the entire business.

Valuing gifts of closely held stocks

Shifting control of a closely held corporation can be accomplished in several ways, including redemptions, stock sales or gifts.

Using a gift program to shift control to family members

Lehn is Certified by the Supreme Court of New Jersey as a Civil Trial Attorney and practices in the areas of commercial litigation, franchise and employment law, legal malpractice real estate and litigation involving closely held corporations.