A Statutory Close Corporation is created under a supplemental state corporation statute, and is controlled by special state law. This type of corporation is similar to a limited liability company but is it able to function without some of the formalities that are included in an LLC such as a board of directors.
A Statutory Close Corporation is a corporation that is run by a statute that is supplementary to the corporation statutes. An S Corp. differs from a normal corporation because it does not have to be as formal. If a corporation fails to follow the requirements, a court can pierce the view of limited liability and the shareholders may become personally liable. By forming a statutory close corporation, it becomes much easier to avoid these possibilities. If the special statute does not apply in a certain circumstance, the normal corporation laws apply. This type of corporation can only have a limited number of shareholders.