Define: Closely Held Corporation

A closely held corporation is a type of business entity where the majority of the shares are owned by a small number of individuals or a single family.

Unlike a publicly traded corporation, a closely held corporation does not have shares that are publicly traded on a stock exchange. The ownership is typically limited to a small group of individuals who have a close relationship or familial ties.

Some advantages of forming a closely held corporation include limited liability protection for shareholders, potential tax benefits, and flexibility in decision-making due to the smaller number of shareholders.

Yes, a closely held corporation can have multiple classes of shares, allowing for different rights and privileges for different shareholders. This can be useful in structuring ownership and control within the corporation.

Decisions in a closely held corporation are typically made by the majority shareholders or by a board of directors appointed by the shareholders. The specific decision-making process may be outlined in the corporation’s bylaws or operating agreement.

Yes, a closely held corporation can issue stock options or grants to employees as a form of compensation or incentive. However, the specific rules and regulations regarding stock options may vary depending on the jurisdiction and the corporation’s structure.

The transfer of shares in a closely held corporation may be subject to certain restrictions, such as rights of first refusal or limitations on transferring shares to non-shareholders. These restrictions are typically outlined in the corporation’s bylaws or operating agreement.

If a shareholder wants to sell their shares in a closely held corporation, they may need to follow certain procedures outlined in the corporation’s bylaws or operating agreement. This may include offering the shares to existing shareholders first or obtaining board approval for the sale.

Yes, a closely held corporation can be dissolved or liquidated if the shareholders decide to wind up the business. The specific process for dissolution or liquidation will depend on the jurisdiction and the corporation’s governing documents.