Many people may not have heard the term “closely held corporation” but are familiar with this type of corporation. A closely held corporation is a private corporation whereby the shares are not traded on any of the national securities exchanges. The closely held corporation is generally formed by a small group of individuals, such as close friends or family members who wish to protect the individual owners from liability. The organization of the closely held corporation is generally run by the owners or shareholders. Bylaws must clearly state that the shareholders have limited ownership to the initial stockholders in order to be considered a “closely held corporation,” and the original owners retain total control of the corporation.

Requirements to start a closely held corporation:

1. File the Articles of Incorporation with the Secretary of State’s office.
2. Prepare the Bylaws.
3. Elect the Officers and Directors.