Question

To make, sell, and distribute candy that Ethan has developed, he incorporates his business and designates his sister and brother as corporate officers. He sells them shares of stock. No shares are offered to the public. The three agree that if any one of them decides to leave the business, the others will buy that person's stock. Ethan's corporation is most likely:

a. a benefit corporation.
b. a close corporation.
c. an S corporation.
d. an alien corporation.

Answer 1

Answer: a close corporation

Explanation: In simple words, a close corporation refers to a corporation the number of shareholders of which does not exceed more than the statutory limit of 35 and is not a public corporation.

In the given case, Ethan has distributed the shares of his organisation to his brother and sister. He has made provisions under no outsider will be able to have the shares of his company.

Hence from the above we can conclude that his corporation is a closed corporation.