Definition
An open corporation is a corporation in which membership or ownership is not restricted — any member of the public may acquire shares or become a corporator. The term operates in two related but distinct senses:
1. In classical corporate law usage, an open corporation is one in which all corporators (members) have a vote in the management of the corporation's affairs, as distinguished from a select or close corporation where governance is restricted to a self-perpetuating inner body.
2. In modern business law usage, an open corporation is functionally synonymous with a publicly held corporation — one whose shares are offered to and freely tradeable by the general public, typically through a stock exchange or public market, as opposed to a closely held or close corporation whose shares are held by a limited number of persons and not publicly traded.
The term is archaic in current practice. Contemporary legal drafting and corporate statutes overwhelmingly use "publicly held corporation" or "public company" to describe what earlier sources called an open corporation.
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Common Confusion
OPEN CORPORATION vs. CLOSE CORPORATION: These are direct antonyms in the classical sense, but researchers must be careful. "Close corporation" (or "closely held corporation") has acquired a precise statutory meaning in many jurisdictions — a corporation that elects close-corporation status and operates under special governance rules. "Open corporation" has no equivalent modern statutory analog. Do not assume "open corporation" in a historical source maps cleanly onto "publicly traded company" in a modern regulatory sense; the classical usage emphasizes participatory governance rights, not securities trading.
OPEN CORPORATION vs. NONPROFIT/PUBLIC CORPORATION: The word "open" or "public" in historical sources sometimes signals a corporation constituted for public benefit (a public corporation, such as a municipality) rather than one with unrestricted share ownership. Context is essential.
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Why It Matters in Research
The primary research risk with "open corporation" is temporal mismatch. The term appears in older treatises, early corporate charters, and nineteenth-century case law but is largely absent from modern statutes and contemporary corporate governance literature. A researcher encountering the phrase in a pre-twentieth-century source should not reflexively translate it as "publicly traded company" in the modern SEC-regulatory sense. The classical meaning centers on participatory voting rights among all corporators — a governance question — while the modern public/private distinction centers primarily on securities law and transferability of shares.
The contrast with close corporation is the conceptual anchor for this term. Because "close corporation" developed substantial statutory treatment in the twentieth century (Delaware, for example, has a dedicated close corporation subchapter), researchers tracing the open/close distinction will find abundant modern material on the close side and almost none on the open side. The modern equivalent — publicly held corporation — is governed by a different body of law (federal securities regulation, stock exchange listing requirements) that early corporate law sources did not contemplate.
Researchers working in the Law Mind Business Organizations encyclopedia will find business_43 the most productive entry point, as it maps the taxonomy of corporate types including the close/public distinction that replaced the close/open framing. That entry also addresses professional and benefit corporations, which are specialized modern forms that do not correspond to the historical open/close axis at all.
Researchers should also be alert to the term appearing in contexts involving municipal or quasi-public corporations, where "open" may signal public accountability or public membership rather than share transferability.
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Historical Dictionary Support
Black's Law Dictionary provides the core historical definition: an open corporation is one "in which all the citizens or corporators have a vote in" — the entry as preserved is fragmentary but the complete sense is: one in which all corporators have a vote in the management and affairs of the corporation, contrasted with a select corporation (also called an aggregate corporation in some sources) where governance power is concentrated in a chosen body.
This framing reflects the governance-centric view of corporations that dominated Anglo-American corporate law before the rise of the publicly traded joint-stock company. Early corporate law was preoccupied with who exercised internal governance power; the open/select or open/close distinction sorted corporations by whether all members had equal participatory rights or whether a subset controlled affairs.
What historical dictionaries largely miss is the securities-law transformation of this concept. By the mid-twentieth century, the economically salient distinction between corporations was not internal governance structure but share transferability and public market access — dimensions that the classical open/close framing does not capture. Black's preserves the older usage without bridging it to modern public-company law, which means researchers relying solely on historical dictionary definitions will have an incomplete picture of how the concept evolved.
No significant divergence exists among historical sources on the core meaning; the term was never heavily contested. Its obscurity in modern sources is itself informative — the concept was absorbed into, and largely replaced by, the public/private corporation distinction.
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Jurisdictional Note
"Open corporation" does not appear as a term of art in any major modern U.S. corporate statute. State corporation codes use "publicly held corporation," "public company," or leave the concept to securities law definitions. Researchers working in Commonwealth jurisdictions (U.K., Australia, Canada) will encounter "public company" as the modern equivalent, with its own statutory definition distinct from U.S. usage.
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Encyclopedia Cross-Reference
The Law Mind Business Organizations & Corporate Law Encyclopedia, "Corporate Formation — Corporate Types (Close, Professional, Benefit Corporations)" (business_43)
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