This guidance note provides a detailed definition of a close company. For guidance on the effects of being a close company, see the Close companies ― overview guidance note.

In summary, the close company rules are targeted at those companies where the owners can manipulate the activities of the company to influence their own tax position.

Therefore, broadly speaking, in most cases an owner-managed company, family company or private company will be close, but in some cases close company status may not be immediately apparent.

When reviewing if a company is close, the following actions should be taken:

1. •

   confirm who are the participators in the company and which are directors

2. •

   establish whether each participator is associated with any others

3. •

   detail what share capital and voting power each participator and their associates have, including any rights which are attributed

4. •

   detail what rights on the winding up of the company each participator and their associates have

5. •

   confirm that the company is not covered by the exceptions to close company status

6. •

   determine