Definition of a close company

Produced by a

Owner-Managed Businesses

Guidance

The detailed definition of a close company is set out below, but in summary the rules are targeted at those companies where the owners can manipulate the activities of the company to influence their own tax position.

Therefore, broadly speaking, in most cases an owner-managed company, family company or private company will be close, but in many cases close company status may not be immediately apparent.

When reviewing if a company is close the following actions are taken:

•
confirm who are the participators in the company and which are directors
•
establish who is associated with the participators
•
detail what share capital and voting power the participators and their associates have, including any rights which are attributed
•
detail what rights on the winding up of the company the participator and their associates have

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