Closely Held Corporations

• A closely held corporation is a company that has stock, but the stock is usually privately held -- usually by a small handful of investors -- and does not trade on a stock exchange. Publicly traded companies, such as Apple Computer and Exxon, are more well known, but the number of closely held corporations vastly outnumber their publicly traded counterparts.
  
  

Voting Rights

• Corporations, both publicly traded and closely held, operate as true democracies, where the majority rules. Investors each get a vote for each share of stock they own. While shareholders do not get a say in day-to-day operating and management decisions, shareholders elect company directors responsible for these types of decisions by a majority vote.
  
  

Inspection Rights

• In Texas, shareholders of closely held companies have the right to inspect the books of a corporation they are a shareholder in. In order to qualify for inspection rights, you must be a shareholder for at least six months or you must own at least 5 percent of the corporation's outstanding shares.
  
  

Shareholder Oppression

• In Texas, certain conduct by majority shareholders toward minority shareholder in closely held corporations has been determined by the courts to be oppressive, and shareholders may have legal remedies available to them if they have been oppressed. Shareholders can bring oppression lawsuits against major shareholders if they breach their fiduciary duty. A breach in fiduciary duty to minor shareholders might include failure to pay dividends when large profits are earned, unreasonably diluting shares by creating additional stock offerings and even forcing the sale of minority shareholder stock.