Close companies

What is a close company?

A close company is an Irish resident company which is controlled by:

  • five or fewer participators
  • or
  • participators who are directors (even if they number more than five).

A company is also a close company if, on full distribution of its distributable income, more than half of this income would be paid to:

  • five or fewer participators
  • or
  • participators who are directors.

A manager of a company who owns or controls 20% or more of the ordinary shares of the company is treated as a director.

Meaning of control

Control of a company includes:

  • control over the company’s affairs
  • ownership of the majority of the company’s share capital or voting power
  • entitlement to receive the majority of a company’s income if it was distributed to the participators
  • or
  • entitlement to receive the majority of a company’s assets if these were distributed to participators on a winding up of the company.

Exclusions from being a close company

Certain companies are excluded from being a close company such as:

  • a company that is not Irish resident
  • a registered industrial and provident society
  • a building society
  • certain quoted companies in which the public holds 35% or more of the voting power
  • a company controlled by the State, a European Union (EU) Member State, or a tax treaty territory, that is not otherwise a close company.

A company will also not be a close company if it is controlled by one or more companies which are not close companies. This is provided that it cannot be treated as a close company, except by taking a non-close company as one of the five or fewer participators.

  • Example 1

    Alan and John each own 50% of the issued share capital of Company A.

    As Company A is under the control of five or fewer participators, the company is a close company.

  • Example 2

    There are ten unconnected shareholders in Company B. Each shareholder individually controls 10% of the shares. Seven of those shareholders are also appointed as the company’s directors.

    Five or fewer participators do not own more than 50% of Company B’s shares. However, the company is under the control of participators who are directors. Therefore, Company B is a close company.

    If, in the example above, Company B was not Irish tax resident, then Company B would not be a close company.

  • Example 3

    Deirdre is a shareholder of Company C. She owns 10% of the issued shares of Company C and controls 55% of the voting power. Eighteen other unconnected shareholders each hold 5% of the issued shares and 2.5% of the voting power in Company C.

    Five or fewer participators do not own more than 50% of Company C’s shares. However, the company is under the control of one participator due to the voting rights held by her. Therefore, Company C is a close company.

Next: Meaning of participator and associate

Published: 19 November 2025 Print this page

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