All of the following are characteristics of a closely held corporation EXCEPT:

the shares are publicly traded. More test answers on https://studyhippo.com/business-law-entities/

Which of the following statements is NOT CORRECT? a. When a corporation’s shares are owned by a few individuals, we say that the firm is “closely, or privately, held.” b. “Going public” establishes a firm’s true intrinsic value and ensures that a liquid market will always exist for the firm’s shares. c. The stock of publicly owned companies must generally be registered with and reported to a regulatory agency such as the SEC. d. When stock in a closely held corporation is offered to the public for the first time, the transaction is called “going public, or an IPO,” and the market for such stock is called the new issue or IPO market. e. It is possible for a firm to go public and yet not raise any additional new capital for the firm itself.

b. “Going public” establishes a firm’s true intrinsic value and ensures that a liquid market will always exist for the firm’s shares. More test answers on https://studyhippo.com/ch-5-practice-questions-2/

9. Closely held corporations face the loss of limited liability through application of the doctrine known as piercing the corporate veil.

T More test answers on https://studyhippo.com/chapter-9-404-daily-double/

Anyone can invest in a closely held corporation.

False More test answers on https://studyhippo.com/accounting-review/

Ellen started a catering business, but soon decided that catering was too stressful for her. She could close her business relatively easily and return to school because the business was a a. producer cooperative. c. sole proprietorship. b. general partnership. d. closely held corporation.

c. sole proprietorship. More test answers on https://studyhippo.com/economics-sole-proprietorships/

Privately held corporations are also closely held corporations.:

True More test answers on https://studyhippo.com/econ-8-3/

management of closely held corporation

-has a single shareholder or a tight knit group of shareholders, who usually hold the positions of directors and officers -managements resembles management of a sole proprietorship or partnership -the firm must meet all specific legal requirements set forth in state statutes -to prevent a majority shareholder from dominating a closely held corporation, the company may require that more than a simple majority of the directors approve any action taken by the board (applies only to extraordinary actions) More test answers on https://studyhippo.com/blaw-chapter-39/

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Closely Held Corporation Flashcards, test questions and answers

Q: Closely held corporations

a corporation that is owned by a few individuals who are typically associated with the firms management More test answers on https://studyhippo.com/chapter-3-business-finance/

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What is Closely Held Corporation?

A closely held corporation is a type of business entity in which the majority of ownership shares are owned by a small group of individuals, usually family members or friends. The owners have close control over the company and its operations, which gives them significant influence. Unlike publicly traded corporations, a closely held corporation does not offer shares to the general public; instead, ownership is restricted to those within the inner circle.Advantages of a Closely Held Corporation:1. Tax Advantages: A closely held corporation offers many tax advantages that other types of businesses lack such as pass-through taxation and limited liability protection for shareholders. Pass-through taxation allows profits and losses to be reported directly on the personal income tax returns of shareholders without having to pay corporate taxes first. This can be beneficial if there are large losses incurred during certain years as it reduces their taxable income for those years. Limited liability protection shields shareholders from being personally liable for business debts and liabilities beyond their investment in the company. 2. Flexibility: Closely held corporations have greater flexibility when it comes to decisions like salaries, dividend distributions and voting rights than larger companies with more publicly traded shares do since they’re only answerable to an exclusive group of people who can agree or disagree with proposed changes depending on what’s best for all involved parties. This approach also helps ensure that all shareholders are kept informed about important decisions quickly since they’re made in-house rather than needing approval from outside investors or regulatory bodies like with public companies do which requires more time and effort before a decision is made finalised. 3. Continuity: Since ownership isn’t subject to change due to external forces such as stock market fluctuations or new investors entering / leaving, there is greater continuity within closely held corporations compared to other businesses models where changes in leadership may occur often due to external circumstances. This helps ensure that direction remains consistent over time and allows current owners peace of mind knowing that their investments will remain safe regardless of any external issues affecting other businesses around them. Disadvantages Of A Closely Held Corporation:1) Limited Resources: Due to the small size nature of most closely held corporations, these entities typically lack access resources needed for growth opportunities such as venture capital funding or access large loan options available through banks or external investments firms. Without access these resources , expansion plans may be hindered significantly limiting potential future revenues streams offered through increased sales volumes etc.