What is a close company?
Definition of close company
A close company is a limited company with five or fewer 'participators', or a limited company of which all the 'participators' are also directors.
Example of a close company:
Mrs A is the sole director and shareholder of a company called Mrs A Ltd. Mrs A is its only participator. Because Mrs A Ltd has five or fewer participators, it’s a close company.
Drs B, C, D, E, F and G are all directors and shareholders of a company called Drs BCDEFG Ltd. They are the company’s only participators. Because all the participators are also directors, Drs BCDEFG Ltd is a close company.
Frequently Asked Questions
What is the difference between a close company and any other limited company?
If a close company makes a loan to a participator that isn’t repaid within nine months and one day of the company’s year end, the company will have extra tax to pay.