A South Carolina close corporation is governed by the South Carolina Statutory Close Corporations Supplement to the Business Corporation Act. The Supplement eliminates many of the strict requirements and formalities required to maintain the limited liability status of the corporation. A South Carolina close corporation is created by filing Articles of Incorporation which include a statement announcing it is a statutory close corporation. Generally speaking, a close corporation’s shareholders are actively involved in the day-to-day functions of the business. Statutory close corporations may function much like partnerships and are often used by family businesses.
South Carolina statutory close corporations are corporations that are owned, controlled and managed by a small group of people and not required to adhere to many of the formalities required by traditional corporations.
Close-Corporation

The South Carolina Statutory Close Corporations Supplement states that a business’s shareholder that fails to observe formalities required by corporations in the management of the business do not lose their limited liability status. A South Carolina close corporation also eliminates many of the formalities required by corporations. For instance: 

  • A South Carolina close corporation may operate without a board of directors as long as the articles of incorporation state as much.
  • As long as there is more than one shareholder, the shareholders are allowed to contractually agree to operate the business as a partnership.

South Carolina close corporations are additionally not required to adopt bylaws as long as the provisions required by law to be contained in the bylaws (e.g. number of directors, notice of director’s meetings, authority of officers) are included in the articles of incorporation or the shareholder agreement.  These type of corporations are also not required to hold annual shareholder meetings unless a shareholder delivers written notice requesting a meeting at least 30 days before the proposed meeting.