The California Statutory Close Corporation: Gateway to Flexibility Or Trap for the Unwary

This article examines the California General Corporation Law's new provisions regarding close corporations. The author begins by discussing the actual provisions in the law. The author then discusses the advantages and disadvantages of being a close corporation and utilizing the close corporation devices. Specifically the author looks at Federal tax problems and California securities law problems.

Next, the author makes recommendations for how to improve the close corporation provisions of the law. The author concludes that new rules may transform what was meant to be a blessing, provided by the provisions for close corporations, into a curse.