California Voting Trust of Shares in Closely Held Corporation

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US-02094BG
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Description

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.

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FAQ

The Voting Trust shall either be treated as a grantor trust under subpart E, part I of subchapter J of the Internal Revenue Code of 1986, as amended, or shall be treated as merely a custodial arrangement that is not an entity recognized for U.S. federal tax purposes, and the provisions of this Agreement shall be

Key Takeaways. Voting trust agreements allow shareholders to transfer their voting rights to a trustee, effectively giving temporary control of the corporation to the trustee.

A voting trust is a legal trust created to combine the voting power of shareholders by temporarily transferring their shares to the trustee. In exchange for their shares, shareholders receive certificates indicating they are beneficiaries of the trust.

Shareholders also have the right to vote on matters that directly affect their stock ownership, such as the company doing a stock split or a proposed merger or acquisition. They may also have the right to vote on executive compensation packages and other administrative issues.

A voting trust certificate is a document used to give temporary voting control over a corporation to one or several individuals. It is issued to a shareholder and represents the normal rights of any other stockholder, such as receiving quarterly dividends in exchange for their common shares.

Voting trusts are often formed by company directors, but sometimes a group of shareholders will form one to exercise some control over the corporation. It can also be used to resolve conflicts of interest, increase shareholders' voting power, or ward off a hostile takeover.

A voting trust certificate is a document issued by a limited-life trust of a corporation established to give temporary voting control of a corporation to one or a few individuals.

Shares of Class A Common Stock represented by Trust Interests may be withdrawn from the Voting Trust only (a) upon written notice by a Beneficiary to the Trustee (a Class A Notice of Withdrawal) or (b) in connection with an Ineligibility Withdrawal or a Selling Withdrawal (each as defined below).

Understanding Stockholder Voting RightsShareholder have the right to vote on corporate actions, policies, board members, and other issues, often at the company's annual shareholder meeting.

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California Voting Trust of Shares in Closely Held Corporation