What is a close corporation?
A statutory close corporation is characterized by its traditionally small size, its consolidated management structure, and the statutory restrictions on the transfer of its shares. There are approximately 6,000 close corporations currently existing in Missouri. A statutory close corporation’s shareholders generally may not transfer their shares of stock without allowing the corporation’s other shareholders a right of first refusal and the corporation may operate without a board of directors and in some instances without bylaws. The close corporation election is made in the entity’s articles of incorporation.
A close corporation, also known as a closely held corporation, is a corporation in which (1) the stock of the corporation cannot be traded or sell to public; (2) the number of shareholders must be specified, and typically cannot exceed 35; and (3) certain limitations may be placed on the transfer of stock. A close corporation can be advantageous for small businesses.
