• A corporation whose shares are held by a single shareholder or closely knit group of shareholders. Generally, there are no public investors, and its shareholders are active in the management and/or operation of the business. 
• The shareholders of a close corporation are generally personally liable for the debts and liabilities of the close corporation only to the extent of their capital contribution.  For Close corporations whose business and affairs pursuant to a shareholders' agreement are managed in whole or in part by shareholders or any other person or persons rather than solely by the board, shareholders can be considered to be directors when the context of the Law requires.  Pursuant to this, shareholders are subject to liabilities imposed on directors for acts or omissions taken by those empowered to manage the business and its affairs. 
• A corporation may be formed initially as a close corporation or it may adopt close corporation status by amending its articles of incorporation to include a statement: "This corporation is a close corporation"
• A statutory close corporation may operate without a board of directors if its articles of incorporation contain a statement to that effect 
• Bylaws are not required for a close corporation if provisions normally included in the bylaws are included in the shareholder's agreement or the articles of incorporation 
• A close corporation's profits are taxed twice: once at the corporate level and again when profits are distributed as dividends to their shareholders. If a close corporation meets specific IRS requirements, it can file for Subchapter S Corporation status and thereby avoid double taxation. 

• Incorporators must file the Articles of Incorporation, along with the required processing fees, with the Texas Secretary of State. Once the filing is officially approved, the business begins its existence, as a separate legal entity.  Incorporators may also choose to delay effectiveness of the filing and therefore delay the beginning of existence for the business.  The effectiveness may be declared to begin at a particular date and time or upon the occurrence of specific events and can be delayed up to ninety days from the date of filing.
• First, choose the name of your corporation. The name must be clearly different from the name of another business. So, at no extra charge, Proactive Management will perform three name searches to determine if your desired name(s) are available.
• This name must also include one of the following phrases "corporation," "company," or "incorporated" or end with an abbreviation of one of the preceding words 
• The name must not contain any word or phrase which indicates or implies that it is organized for any purpose other than one or more of the purposes contained in the Articles 
• The Articles of Incorporation will address:
  • Name and address for each incorporator, each of whom must be at least 18 years old, a foreign or domestic corporation, or an estate and the signature of at least one incorporator
  • Street address of the registered office and the name of the registered agent at such office. The registered office can be the same as the corporation's place of business and the registered agent can be an officer, owner or other individual in the corporation or another business with a business office identical with each such registered office.
  • The aggregate number, class, and par value (if any) of authorized shares 
  • A statement of the preferences, qualifications, limitations, restrictions, and the special or relative rights including convertible rights, if any, in respect of the shares of each class and provisions limiting or denying preemptive rights.
  • The duration of the company which may be perpetual 
  • The purpose of the company, which can be to engage in any lawful business 
  • The directors
    • number of directors serving on the initial Board of Directors
    • names and addresses of the person(s) serving as directors until their successors be elected and qualify
    • of a Close Corporation which is to be managed in some other manner pursuant to a shareholders' agreement by the shareholders or by the persons empowered by the agreement to manage its business and affairs, the names and addresses of the person or persons who, pursuant to the shareholders' agreement, will perform the functions of the initial Board of Directors provided for by this Act 

Disclaimer - Not Providing Legal Services - Proactive Management, Inc. presents the material on this site as general information only. It is not offered as and does not constitute legal advice or legal opinion and should not serve as a substitute for advice from an attorney or accountant familiar with the facts of your specific situation. We provide business formation services. We are not a law firm and do not provide legal or tax advice or services. We make no warranty, express or implied concerning the accuracy or reliability of the content at this site or at other sites to which we link.