A close corporate or closely held corporation is a form of corporation that is owned and operated by a few individuals, often members of the same family. One of the advantages is that state laws generally permit close corporations to function more informally than general C corporations. For example, in some jurisdictions, shareholders can fill vacancies on the board of directors without a vote of the shareholders, and shareholders can make decisions without holding meetings of the board of directors. Also the corporation can elect to be taxed as separate entity like a C Corporation or to have its taxes passed through onto the shareholder's personal tax return, the same as an S Corporation. Some of the disadvantages are that the close corporation must first offer the shares to existing stockholders before selling to new stockholders, and the maximum number of shareholders is fixed by law. Moreover, not all states recognize close corporations.
California Governance
In California, general provisions governing most corporations are found in the California Corporations Code commencing with sections 100 (domestic stock corporations), 5110 (domestic nonprofit public benefit corporations), 7110 (domestic nonprofit mutual benefit corporations), 9110 (domestic nonprofit religious corporations) and 2100 (foreign (out of state or country) corporations).
Foreign Corporations
A foreign (out of state or country) corporation transacting intrastate business in the State of California must qualify to do so with the Secretary of State's office. "Transacting intrastate business" is defined as entering into repeated and successive transactions of a corporation's business in this state, other than interstate or foreign commerce. See California Corporations Code Section 191. If you are unable to make a determination based upon the contents of Corporations Code Section 191, you will need to consult private legal counsel. The Secretary of State's office cannot provide legal advice concerning a corporation's need to qualify to transact intrastate business in California.
How We Serve Our Clients
With our experience working with entrepeneurs to establish new businesses we will guide you through the process of forming a new company, assisting you in choosing the appropriate legal structure and explaining the advantages of each for your particular enterprise. After the business is established, our attorneys will be at your disposal to answer general legal questions when they arise. Our clients also call on us to assist them during transitional periods, raising capital, locating venture partners, merging, selling, and closing a business.
