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.
Nevada Voting Trust of Shares in Closely Held Corporation: A Detailed Description and Types The Nevada Voting Trust of Shares in a Closely Held Corporation is a legal arrangement that allows the shareholders of a closely held corporation in the state of Nevada to transfer their voting rights to a trustee. This trust is established to ensure efficient management and protect the interests of shareholders in situations where the corporation's ownership structure is complex or requires a unified decision-making process. Key benefits of establishing a Nevada Voting Trust of Shares include maintaining anonymity, enhancing corporate governance, and facilitating long-term planning and management stability. By consolidating voting rights in the hands of a trustee, the trust protects shareholders from potential conflicts of interest or disputes that could arise within the corporation's ownership. Different Types of Nevada Voting Trust of Shares in Closely Held Corporation: 1. Statutory Voting Trust: In this type of trust, the voting rights of shareholders are transferred to a trustee based on the provisions of the Nevada Revised Statutes (NRS) that specifically govern voting trusts. This gives the trust legal recognition and protection under state laws. 2. Common Law Voting Trust: Unlike the statutory voting trust, this type is established and governed by the common law principles of trust and contract. Common law voting trusts are based on the terms and conditions detailed in a trust agreement between the shareholders and the trustee. 3. Irrevocable Voting Trust: As the name suggests, this type of trust is designed to be permanent and cannot be easily revoked or modified. Shareholders commit to transferring their voting rights to the trustee for an extended period or until specified conditions are met, ensuring stability and continuity in decision-making processes. 4. Revocable Voting Trust: In contrast to the irrevocable voting trust, this type allows shareholders to retain the option to revoke or modify the trust arrangement at any time. Flexibility is provided to accommodate changes in circumstances or shifts in the shareholders' interests. 5. Majority Voting Trust: Under this type of trust, a majority of shareholders agree to transfer their voting rights to the trustee. This enables decisive decision-making by consolidating voting control in the hands of the trustee, ensuring smooth operations and establishing a clear direction for the closely held corporation. 6. Unanimous Voting Trust: In a unanimous voting trust, all shareholders transfer their voting rights to a trustee. This type of trust requires unanimous agreement among the shareholders, ensuring cohesiveness in decision-making without any room for dissent. In summary, the Nevada Voting Trust of Shares in a Closely Held Corporation provides a robust legal framework for managing voting rights and decision-making processes within a closely held corporation. Its various types, including statutory, common law, irrevocable, revocable, majority, and unanimous voting trusts, offer flexibility to suit different corporate structures and shareholder preferences. By establishing such a trust, shareholders can protect their interests and enhance the overall governance and stability of their corporation.
