Hodge O'Neal, CLOSE CORPORATIONS
: LAW AND PRACTICE (1956).
the corporation to be governed as close corporation
. See Ohio Rev.
Aside from the particular context of minority shareholders in close corporations
, we argue that they would not and, therefore, such an overarching default rule in corporate law is inefficient.
Protecting "reasonable expectations" has the ring of contract law, so that we might conclude that, at least in the close corporation
, contract and not governance is central because the protected interest arises from the "bargain." But it is equally persuasive to conclude that in the close corporation
setting corporate law and contract law reach the same conclusion regarding what is the optimal and just result.
shareholders in this type of close corporation
, these positive
(161) It is universally understood to be an integral part of any significant purchase or sale of a close corporation
[W]e hold that stockholders in the close corporation
owe one another substantially the same fiduciary duty in the operation of the enterprise that partners owe to one another.
(6.) In this article, the phrase "close corporation
" will be used by the authors to reference one that is statutorily created, and the phrase "closely held corporation" will be used to reference one that is created by virtue of its attributes.
Usually questions as to whether the death payments constitute compensation for the employee's services and, if so, whether the compensation is reasonable, will arise only in connection with payments for stockholder-employees of a close corporation
. In the following cases it was held that the payments--even though made under contract--were not compensation but rather, payments under a plan to provide financial security for the families of the stockholder-employees.
In contrast, in the intimate environment of the close corporation
, independence means something very different than it does in the harsh spotlight of the public corporation.