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.
Connecticut Voting Trust of Shares in Closely Held Corporation is a legal arrangement established to consolidate voting control over shares in a closely held corporation. This type of trust is commonly used by shareholders in closely held corporations to ensure stability, protect the corporation's interests, and facilitate decision-making processes. In Connecticut, there are two main types of voting trusts related to shares in closely held corporations: 1. Connecticut Voting Trust Agreement: A voting trust agreement is a formal legal document that outlines the terms and conditions of the trust arrangement. It specifies the duration, purpose, and responsibilities of the voting trustee, who is appointed to represent the beneficiaries' voting rights. The agreement may also include provisions related to the distribution of share profits and other matters concerning the closely held corporation. 2. Connecticut Voting Trust Certificate: A voting trust certificate is a document issued to the shareholders who transfer their shares to the voting trust. It serves as evidence of the shareholders' decision to participate in the trust and places their shares under the control of the voting trustee. The certificate typically contains information such as the number and class of shares transferred, the voting rights associated with those shares, and the terms of the trust. By creating a Connecticut Voting Trust of Shares in a Closely Held Corporation, shareholders can centralize decision-making authority and voting power in the hands of the designated trustee. This can be beneficial for maintaining stability, especially in cases where multiple shareholders have differing opinions or there is a need for a unified voice in important matters. The voting trustee, who can be an individual or an entity, undertakes the responsibility of voting on behalf of the shareholders as per the terms of the trust. Their primary role is to exercise the voting rights associated with the trust shares and make decisions in the best interests of the corporation and the trust beneficiaries. The Connecticut Voting Trust of Shares in a Closely Held Corporation allows shareholders to have more control over the voting process and ensures that decisions are made collectively, considering the objectives and vision of the corporation. It also offers protection against hostile takeovers and mitigates conflicts that may arise among shareholders. Overall, the Connecticut Voting Trust of Shares in Closely Held Corporation is an effective mechanism for consolidating voting control, promoting stability, and facilitating decision-making within closely held corporations.
