Voting Trust

A voting trust is a legal agreement in which one or more shareholders in a corporation transfer their shares to a trustee, who then votes the shares on their behalf. The trustee is typically a trust company or other financial institution that is independent of the corporation.

Voting trusts are often used to consolidate control of a corporation in the hands of a small group of shareholders. This can be done for a variety of reasons, such as to facilitate a merger or acquisition, to prevent a hostile takeover, or to ensure that the corporation's policies are aligned with the interests of the shareholders.

Voting trusts can also be used to protect minority shareholders from the actions of the majority shareholders. For example, a minority shareholder may agree to transfer their shares to a voting trust in exchange for guarantees that they will be able to elect a certain number of directors to the board of directors.

Voting trusts are governed by state law. The specific terms of a voting trust agreement will vary depending on the state in which it is formed. However, most voting trust agreements will include provisions that specify the following:

* The duration of the voting trust
* The identity of the trustee
* The voting rights of the trustee
* The rights of the shareholders to terminate the voting trust

Voting trusts can be a useful tool for shareholders who want to consolidate control of a corporation or protect their interests from the actions of the majority shareholders. However, it is important to understand the terms of the voting trust agreement before entering into one.