What Is a Close Corporation? Definition and Use

Definition

Close Corporation - A close corporation is a corporation with a small number of shareholders that can operate with fewer formalities, often without a board of directors or annual meetings.

A close corporation, also called a statutory close corporation in states that authorize it, is designed for tightly held businesses whose few shareholders want corporate form without the full governance machinery. For example, a family business with three owners might elect close corporation status to run by shareholder agreement rather than a formal board, simplifying decisions while retaining limited liability and the ability to issue stock.

The common misconception is that a close corporation offers privacy comparable to an anonymous LLC. It generally does not. Corporations, including close corporations, typically must identify officers or directors to the state at some stage, and many states require an annual statement listing them. Reducing formalities is not the same as reducing public disclosure, and the two are often confused.

For founders weighing structures in Wyoming, New Mexico, Delaware, and Nevada, an LLC in a non-disclosure state is usually the better privacy vehicle. The four anonymous states keep LLC members off the public formation record, whereas a close corporation's officer or director disclosure works against sustained anonymity. Anonymousllc.co steers privacy-focused founders toward the anonymous LLC precisely because it delivers liability protection without the officer-identification footprint corporations carry.