What characterizes a closely held corporation?

• A. It has one shareholder only
• B. It is owned by numerous public investors
• C. It has few shareholders
• D. It cannot issue shares

Answer: (C)

A closely held corporation is characterized by its ownership structure, which consists of a limited number of shareholders. Typically, these corporations are not publicly traded, and the shares are not available for purchase on public stock exchanges. This structure allows for a tighter control among the owners, which can facilitate decision-making and policy implementation.

This nature of few shareholders often leads to a more personal and direct relationship among the owners, which can benefit both governance and strategic planning. Additionally, closely held corporations often retain more control over the company as the distribution of shares is limited.

In contrast, the characteristics of a closely held corporation would not include having only one shareholder, as this does not necessarily align with the definition which includes the potential for several owners. Being owned by numerous public investors would suggest a public corporation rather than a closely held one. A closely held corporation can indeed issue shares, though they are not traded publicly, which eliminates the possibility of option D being accurate.