close corporation: meaning, definition, pronunciation and examples
C1/C2 (Low-frequency, specialized business/legal term)Formal; primarily used in legal, financial, and corporate governance contexts.
Quick answer
What does “close corporation” mean?
A privately held company whose shares are not publicly traded and are held by a small, restricted group of individuals, often family members or a select few.
Audio
Pronunciation
Definition
Meaning and Definition
A privately held company whose shares are not publicly traded and are held by a small, restricted group of individuals, often family members or a select few.
A business structure characterized by limited ownership transferability, often operating with fewer formalities than public corporations, and where ownership and management are typically closely aligned or identical.
Dialectal Variation
British vs American Usage
Differences
In UK English, 'close company' is the more common statutory term for tax purposes, while 'close corporation' is less frequent. In US English, 'close corporation' (or 'closely held corporation') is the standard legal and business term.
Connotations
UK: Strongly associated with tax law and company structure. US: Associated with corporate law, shareholder agreements, and governance.
Frequency
Higher frequency in US legal/business English. In UK English, 'private limited company (Ltd)' is the more common layperson's term for a similar concept.
Grammar
How to Use “close corporation” in a Sentence
The [Family Name] business operates as a close corporation.They decided to form/establish/set up a close corporation.Shares in a close corporation are subject to [restriction].Vocabulary
Collocations
Examples
Examples of “close corporation” in a Sentence
adjective
British English
- The close corporation status offered them more privacy.
- They considered the close corporation model for their new venture.
American English
- A close corporation agreement often includes share transfer restrictions.
- The firm operated as a close corporation for decades.
Usage
Meaning in Context
Business
Used to describe ownership structure, investment opportunities (or lack thereof), and governance models.
Academic
Discussed in law, finance, and business studies regarding corporate governance, succession planning, and equity markets.
Everyday
Rare. Might be used by someone discussing family business structures or small business incorporation.
Technical
Precise legal definition varies by state/country (e.g., Model Statutory Close Corporation Act in the US).
Vocabulary
Synonyms of “close corporation”
Vocabulary
Antonyms of “close corporation”
Watch out
Common Mistakes When Using “close corporation”
- Confusing 'close' (verb/adjective meaning to shut) pronunciation /kləʊz/ with the adjective 'close' /kləʊs/ in this term.
- Using it as a synonym for any small business (it is a specific legal structure).
- Spelling: 'closed corporation' is a variant, but 'close corporation' is standard.
FAQ
Frequently Asked Questions
No. An LLC (Limited Liability Company) is a different legal structure that blends corporate and partnership features. A close corporation is a type of corporation with specific restrictions on share transfer and often shareholder numbers. The availability of each structure depends on local law.
Yes, but it would cease to be a close corporation. Through an initial public offering (IPO), it would become a publicly traded corporation, subject to different regulations and reporting requirements.
Difficulty raising capital (cannot sell shares to the public), potential for shareholder disputes due to close involvement, and often more complex valuation of individual shareholdings.
Ownership is typically held by a small group such as family members, founders, or a few key employees. The owners are often also the managers of the business.
A privately held company whose shares are not publicly traded and are held by a small, restricted group of individuals, often family members or a select few.
Close corporation is usually formal; primarily used in legal, financial, and corporate governance contexts. in register.
Close corporation: in British English it is pronounced /ˌkləʊs ˌkɔːpəˈreɪʃən/, and in American English it is pronounced /ˌkloʊs ˌkɔːrpəˈreɪʃən/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “A closed shop (metaphorically similar concept of restricted membership)”
- “Keep it in the family (describes a typical close corporation dynamic)”
Learning
Memory Aids
Mnemonic
Imagine a business with a CLOSED door (CLOSE) where only a select few (the CORPORATION's owners) have the key.
Conceptual Metaphor
A BUSINESS IS A FAMILY / A PRIVATE CLUB. Highlights exclusivity, trust, and restricted access.
Practice
Quiz
What is a defining characteristic of a close corporation?