Think BIG…Start SMART which corporation is right for you



C Corporations (“Close Corporation or Closely Held Corporation”) are referred to companies whose stock is not traded on a stock exchange, also known as a “privately held company.” Most close corporations are small; however some are huge, for example Hallmark Cards, Inc or Mars, Inc. (maker of Mars candy bars.) State laws regulate corporations, but federal law determines their tax status. State provisions of formation of C corps vary from state to state, but there are some similar themes they share in common.

C corps generally protect the rights of all shareholders, even minority shareholders, by requiring unanimous vote of all shareholders regarding major executive decisions, such as setting salaries, choosing officers, and dividend pay-outs. It could grant any shareholder veto power over all important corporate decisions. Transfer restrictions allow shareholders to offer their shares for sale, only after first giving the right to the other owners to buy them.

Dispute resolution also allows the shareholders to agree in advance that all shareholders have the right to dissolve the corporation if some particular event occurs, whether it is a dramatic decrease in revenues, or if one or more of the owners behave “oppressively” or “unfairly”. C corps are generally more flexible and can operate without a board of directors, a formal set of bylaws, or annual shareholder meetings.