What is the maximum allowed number of stockholders in a close corporation?

In the context of revised corporation codes, a close corporation is one that has a limited number of stockholders, and this limitation is intended to facilitate closer management and operation among the shareholders. The maximum allowed number of stockholders in a close corporation is set at 20. This limitation ensures that the corporation remains closely held and manageable, allowing for easier decision-making and an intimate working relationship among the shareholders.

Having a set number of stockholders helps to ensure that the corporation can operate in a way that mimics partnerships, where personal relationships and trust among the stockholders are prioritized. As such, the law has defined this limit to reinforce the purpose of close corporations, which is to maintain a more personal and direct form of governance compared to larger, publicly traded companies.