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Definition

Amit (ca student) (112 Points)

09 May 2009

What is definition of Closely Held Co. ? pls give reference

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Milan Somani (CA) (1456 Points)
Replied 09 May 2009

A publicly-traded company in which a small group of shareholders control the majority of the shares. These majority shareholders tend to hold on to the company's stock, and, as such, only minority shares are traded, leading to light trade volume. Closely held companies are, by their nature, resistant to hostile takeovers and proxy wars. They tend to be more stable than other companies because their share prices are not determined by (sometimes irrational) investment decisions, but by the value of the company itself. However, closely held companies do not have access to as much working capital as corporations with more shareholders.