Closely held corporations are those in which a small group of shareholders control the operating and managerial policies of the corporation. Most, but not all, closely held corporations are also family businesses. Family businesses may be defined as those companies where the link between the family and the business has a mutual influence on company policy and on the interests and objectives of the family.
A voting trust is a device for combining the voting power of shareholders. It is not unlawful for shareholders to combine their voting stock for the election of directors so as to obtain or continue the control or management of a corporation. Some state laws limit the duration of voting trusts to a period of a certain number of years.
Alaska Voting Trust of Shares in Closely Held Corporation: A Comprehensive Overview Keywords: Alaska Voting Trust, Closely Held Corporation, Shareholder Protection, Voting Rights, Trustee, Corporate Governance Introduction: An Alaska Voting Trust of Shares in a Closely Held Corporation is a legal arrangement in which shareholders of a closely held corporation entrust their voting rights to a designated trustee. This arrangement helps protect shareholders' interests by ensuring their shares' voting power is consolidated and exercised in a unified manner. In Alaska, different types of voting trusts can be established based on the specific needs of closely held corporations. Types of Alaska Voting Trusts: 1. Statutory Voting Trust: This type of voting trust is created in accordance with Alaska Statutes Section 10.06.880 – 10.06.995. It involves the appointment of a trustee by the shareholders to hold their shares and exercise voting rights according to the terms and conditions defined in the trust agreement. 2. Common Law Voting Trust: Alaska also recognizes common law voting trusts that are not governed by specific statutory provisions. These trusts operate under general principles of contract and agency law. The trust agreement outlines the powers and responsibilities of the trustee, as well as the rights and obligations of the shareholders. Key Features and Purposes: a. Shareholder Protection: By pooling the voting rights of closely held corporation shareholders, the Alaska Voting Trust ensures that shareholders' interests are protected against potential internal disputes, conflicting interests, or external pressures. b. Unified Voting Power: The consolidation of voting rights allows the trustee to make informed decisions that align with the collective wishes of the shareholders, promoting a unified approach to corporate decision-making. c. Corporate Governance: The Alaska Voting Trust facilitates effective corporate governance by ensuring a transparent and accountable process for exercising voting rights. It helps prevent any undue influence or manipulation that may arise from fragmented voting power. d. Trustee Responsibilities: The trustee, appointed by the shareholders, is entrusted with safeguarding the shareholders' interests. The trustee must exercise voting rights in a manner consistent with the trust agreement and the best interests of the shareholders. Establishing an Alaska Voting Trust: To establish an Alaska Voting Trust, closely held corporation shareholders must execute a trust agreement detailing the terms, duration, and conditions of the voting trust. The trust agreement must specify the trustee's powers, responsibilities, voting mechanisms, and any limitations or restrictions placed on the voting rights. Conclusion: The Alaska Voting Trust of Shares in a Closely Held Corporation offers a practical and legally recognized mechanism for consolidating voting rights and protecting shareholders' interests. By entrusting their shares to a designated trustee, shareholders can ensure transparent and unified decision-making in corporate governance matters. Whether established under statutory provisions or governed by common law principles, Alaska voting trusts contribute to the stability and effective functioning of closely held corporations.
