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 Puerto Rico Voting Trust of Shares in a Closely Held Corporation is a legal mechanism used to manage and control the voting rights of shareholders in a closely held corporation in Puerto Rico. In this arrangement, shareholders transfer their shares to a trustee who holds them on their behalf and exercises the voting rights associated with those shares. The purpose of a Puerto Rico Voting Trust is to consolidate the voting power of shareholders in order to streamline decision-making and ensure the corporation's best interests are represented. It can be particularly useful in situations where there are numerous shareholders with varying interests or when a unified voting stance is desired. There are different types of Puerto Rico Voting Trusts that can be established based on the specific requirements and objectives of the corporation and its shareholders. Some common types include: 1. Statutory Voting Trust: This is the most basic form of voting trust allowed under Puerto Rico law. It is established through a written agreement between the shareholders and the trustee and is subject to the provisions outlined in the Puerto Rico Corporation Code. 2. Voting Agreement Trust: This type of trust is formed when shareholders enter into a separate voting agreement, which is then entrusted to the trustee. The voting agreement outlines the specific terms and conditions under which the trustee will exercise the voting rights. 3. Cumulative Voting Trust: This trust structure allows shareholders to pool their voting rights together and allocate them as they see fit, regardless of the number of shares they individually own. The trustee then exercises the voting rights based on the shareholders' instructions. 4. Irrevocable Voting Trust: As the name suggests, this type of trust cannot be revoked by the shareholders once established. It provides added stability and continuity by ensuring that the voting rights remain consolidated and unaffected by changes in shareholders' circumstances. Establishing a Puerto Rico Voting Trust involves drafting a trust agreement that outlines the terms, powers, and responsibilities of the trustee and the shareholders. It must comply with the relevant laws and regulations of Puerto Rico, as well as any specific requirements imposed by the corporation's bylaws or articles of incorporation. Overall, a Puerto Rico Voting Trust of Shares in a Closely Held Corporation is a legal arrangement that allows shareholders to consolidate their voting rights under the control of a trustee. It can help streamline decision-making and promote unity among shareholders, ultimately benefiting the corporation and its stakeholders.
