What type of security does a closely held corporation typically prevent?

A closely held corporation, often referred to as a private corporation, is characterized by a limited number of shareholders and does not offer its shares to the general public. This structure inherently restricts public trading on stock exchanges. The shares of closely held corporations are typically owned by family members, close associates, or a small group of investors, which means that there is no market for public trading of its stock. This limited liquidity can affect how shareholders can buy or sell their interests, distinguishing closely held corporations from publicly traded companies where shares are available on exchanges.

In contrast, the other options relate to activities that can still be feasible within a closely held corporation. Such corporations can indeed issue bonds to raise capital, pay dividends to shareholders (depending on profitability and corporate policies), and offer employee stock options, though they may do so in a more limited or structured manner than a public corporation. The emphasis on the absence of public trading highlights the unique nature of a closely held corporation in contrast to publicly traded entities.