close company

close company
A company resident in the UK that is under the control of five or fewer participators or any number of participators who are also directors. There is also an alternative asset-based test, which applies if five or fewer participators, or any number who are directors, would be entitled to more than 50% of the company's assets on a winding-up. The principal consequences of being a close company are that the provision of certain benefits in kind to shareholders can be treated by the Inland Revenue as a distribution as can loans or quasi-loans. Closed investment companies do not qualify for the reduced rate of corporation tax. In the USA close companies are known as closed companies.

Accounting dictionary. 2014.

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Look at other dictionaries:

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