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Definition of 'Closely Held Shares'
The shares in a publicly traded company held by a small number of shareholders, who are either directly affiliated with the company or management, or are majority stakeholder. Closely held shares are not publicly traded in the same manner as common shares. These companies may trade under light volume, since the majority of the shares can be held by a small group of shareholders. Companies that are closely held tend to be resistant to hostile takeovers, since the majority of shares are held within a small, interested group of shareholders.
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Investopedia explains 'Closely Held Shares'
Closely held companies may be more stable than other companies, since share prices are determined by the company's value and not by investor sentiment. Closely held companies may not have access to the same levels of working capital as widely traded corporations, because of low trading volume. However, many companies implement both common and closely held shares.
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