A Close Corporation is a small Corporation which does not have to operate with all the legal formalities of a standard Corporation.
C Corporations are required to have annual shareholders meetings.
A Close Corporation is not required to conduct annual meetings of the shareholders.
In addition shareholders in a Close Corporation may take a more active roll in making decisions and the day to day operation of the Corporation.
A Close Corporation is limited in the number of shareholders that it may have.
The limit is usualy around 30 shareholders.
Small companies and families form Close Corporations to avoid the complexities of stock issuance and other Corporate requirements.
State laws regarding Close Corporations vary and not all states allow Close Corporations.
In order to form a Close Corporation, a written shareholders agreement must be agreed to by all shareholders.