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Division D3.1ÌýÌýÌýÌý What is a close company?

For updates affecting this Division please see Part D0 Updates

Definition of a 'close company'

D3.102 Definition of a 'close company'—overview

Where a company is close there are several implications for the company and the shareholders as summarised at D3.401. Before considering these though, there are several tests that must be carried out to establish if a company is close as it is not always immediately apparent.

The legislation relating to close companies begins with a definition of a close company in terms which seem to be fairly straightforward, but it then goes on to provide definitions of the terms employed which substantially enlarge their scope and also provide a list of exceptions. In particular, a person is deemed to possess the rights of their 'associates', and is also deemed to possess rights which they may be able to acquire at some future time. HMRC guidance is provided