Business, Legal & Accounting Glossary
A type of agreement by which two or more individuals who own corporate stock that carries Voting Rights transfer their shares to another party for voting purposes, so as to control corporate affairs.
A voting trust is created by an agreement between a group of stockholders and the trustee to whom they transfer their voting rights or by a group of identical agreements between individual shareholders and a common trustee. Such agreements ordinarily provide that control of stock is given to the trustee for a term of years, for a time period contingent upon a certain event, or until the termination of the agreement. Voting trust agreements may provide that the stockholders can direct how the stock is to be voted.
Voting Trusts are agreements used to transfer control from management to an investor if the company does not meet its goals. They work by placing management’s stock in a trust with the investor’s shares. The trustee is instructed to vote the entrusted shares as the venture capitalist directs if the company fails to meet its goals. Voting trusts are the exception, not the rule, these days.
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This glossary post was last updated: 30th December, 2021 | 0 Views.