Tag Archive: close corporations

Close Corporations: A Cautionary Tale of Misplaced Trust and Fiduciary Failings

September 23, 2016 8:52 am Published by James D. O'Brien, Jr.

Worcester made its mark in the 19th and 20th centuries as a manufacturing center, giving rise to industrial giants such as Norton Company and Wyman Gordon, many of which were owned for generations by small family groups. Home to inventors and entrepreneurs, our city has also fostered many smaller businesses, founded and operated by families or friends.

Oftentimes the stockholders, directors and officers in these “close” corporations are the same two or three people, each one performing multiple roles simultaneously in the corporate structure. Such companies play a significant role in the Commonwealth’s economy, but their very smallness creates a unique set of risks for the owners.

Close Corporation Defined

In Donahue v. Rodd Electrotype of New England, ...