The statutory concept of a “close” corporation (sometimes called “closed” corporation or “closely held” corporation) is often confused with two other types of corporation. The three corporation concepts are as follows:

a) Statutory close corporation, as defined in California Corporations Code section 158.

b) Issuance of shares under a notice filing procedure with the Commissioner of Corporations pursuant to California Corporations Code section 25102(f) or 25102(h).

c) “S” corporation election pursuant to Internal Revenue Code section 1372.

There are three differences in the mandatory provisions of Articles of Incorporation forming a statutory close corporation and the Articles of Incorporation forming a general stock corporation; the name style requirement; the inclusion of wording denoting close corporation status; and the reference to the number of persons entitled to hold issued shares.