A corporation must elect status as a statutory close corporation. To do so, the corporation must have 35 or fewer shareholders and must file articles of incorporation indicating that it is a closed corporation, and include in the name the words "incorporated," "corporation," or "limited" (as must any corporation).
Although Dryco was a closely held corporation, it was not a statutory close corporation. Status as a "closely held corporation" results from there being no secondary market for the stock. A statutory close corporation, on the other hand, must be formed by an addition to the articles of incorporation indicating this status. Without further action, Dryco is a closely held corporation but is not a statutory close corporation.Thus, Molly and Ruth needed to include in the articles of incorporation that Dryco, Inc. is a closed corporation,