What is a California Close Corporation and is it right for me?

A California Close Corporation is designed to give shareholders of the corporation control over the operations of the corporation without having to abide by many of the corporate formalities required by the California Corporations Code.  If you are and will continue to be the sole owner and director of your company, then there is no reason to form as a Close Corporation.  If you will not be the sole owner, then you may want to consider forming as a limited liability company, which accomplishes much the same thing as a Close Corporation without the limitations and complicated requirements of a Close Corporation.  If, however, you must form as a corporation because of your profession or other reasons, then the Close Corporation may be right for you.  Forming a Close Corporation is complicated, however, requiring specific language in the formation documents as well as a complicated Shareholders’ Agreement, and should not be formed without sound legal counsel.

Jeanne Verger