How does the management structure of a closely held corporation differ from that of a publicly traded corporation?

Answer 1

A close corporation is one whose shares are closely held by members of a family or relatively few persons. The management structure is much like that of a sole proprietorship or a partnership. A close corporation has a single shareholder or a closely knit group of shareholders, who are usually the directors and officers. A publicly traded corporation, on the other hand, may have hundreds or even thousands of shareholders. These shareholders are usually complete strangers. The management of a publicly traded corporation is much more complex than that of a close corporation, simply because of the increased number of shareholders and because of the public accessibility of the stock. The shareholders are usually not involved in management, except to elect directors, approve extraordinary matters, and perhaps bring suits to enforce their rights. The directors broadly manage the corporation and select officers who run the day-to-day business operations.