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.
The District of Columbia Voting Trust of Shares in Closely Held Corporation serves as a mechanism for shareholders to temporarily transfer their voting rights to a trustee. This trust arrangement allows shareholders to consolidate their voting power within a closely held corporation, ensuring effective decision-making and protecting their collective interests. The trust can actively participate in corporate governance matters on behalf of the shareholders, including voting in board elections, approving major business transactions, and providing overall guidance based on the shareholders' wishes. In terms of different types of District of Columbia Voting Trusts, there are primarily two common forms: 1. Revocable Voting Trust: This type of trust grants shareholders the power to revoke or modify the trust arrangement at any point during its existence. It provides flexibility, allowing shareholders to regain their voting rights whenever they deem it necessary. Shareholders can transfer the shares to the trust while having the option to reclaim them if circumstances change or if they wish to vote individually. 2. Irrevocable Voting Trust: In contrast to the revocable trust, the irrevocable voting trust does not allow shareholders to revoke or make changes to the trust agreement once it is established. The shareholders transfer their shares to the trust, surrendering all voting rights until the trust is terminated or expires. This type of trust is often preferred when shareholders aim to add a layer of stability and enforce strict control over the voting process, ensuring that decisions align with their long-term strategies. Both types of trusts provide shareholders with a convenient way to combine their voting power, enabling them to amplify their influence and collectively steer the corporation's direction. The District of Columbia Voting Trust of Shares in Closely Held Corporation is a legal framework that facilitates cohesive decision-making and fosters stability within closely held corporations.
