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 Tennessee Voting Trust of Shares in Closely Held Corporation is a legal arrangement established by shareholders of a closely held corporation in Tennessee. This trust is created to consolidate voting rights and centralize control over the corporation's shares. Key Features of Tennessee Voting Trust of Shares in Closely Held Corporation: — The Purpose: The primary goal of a Tennessee Voting Trust of Shares is to ensure a unified decision-making process within a closely held corporation by pooling voting rights. It enables shareholders to entrust their voting authority to a designated trustee, who then exercises those rights on behalf of the shareholders. — Shareholder Participation: In this arrangement, shareholders voluntarily transfer their shares to the trust, surrendering their direct voting control in favor of a unified decision-making process. Shareholders actively participate in the selection of the trustee and specify the terms, duration, and conditions of the trust agreement. — Trustee's Role: The trustee holds legal title to the shares and exercises the voting rights attached to them as per the trust agreement. The trustee acts in the best interests of the shareholders, ensuring that voting decisions align with their collective wishes. They are obligated to act in a fiduciary capacity and must exercise professional judgment and fairness while making voting decisions. — Duration and Termination: The trust agreement specifies the duration for which the trust exists and the conditions for its termination. Once the trust period expires or predetermined conditions are met, the shares are returned to the participating shareholders, and their direct voting rights are reinstated. Types of Tennessee Voting Trusts: 1. Revocable Voting Trust: This type of voting trust enables shareholders to retain the option to revoke or alter the trust agreement during its duration. It provides flexibility for shareholders if they wish to regain direct control over their shares before the trust's natural termination. 2. Irrevocable Voting Trust: In contrast to revocable trusts, irrevocable voting trusts do not allow shareholders to revoke or amend the trust agreement once established. By committing their shares to the trust, shareholders relinquish their voting control until the trust's predetermined conditions are met. 3. Statutory Voting Trust: Tennessee law recognizes the creation of statutory voting trusts. These trusts adhere to specific regulations set forth by the state legislature, ensuring compliance with legal requirements and providing a clear framework for trust establishment and operation. The Tennessee Voting Trust of Shares in a Closely Held Corporation offers an effective mechanism to consolidate voting control and streamline decision-making within closely held corporations. It provides shareholders with a structured approach to maintain unity and avoid potential conflicts that might arise from individual voting rights.The Tennessee Voting Trust of Shares in Closely Held Corporation is a legal arrangement established by shareholders of a closely held corporation in Tennessee. This trust is created to consolidate voting rights and centralize control over the corporation's shares. Key Features of Tennessee Voting Trust of Shares in Closely Held Corporation: — The Purpose: The primary goal of a Tennessee Voting Trust of Shares is to ensure a unified decision-making process within a closely held corporation by pooling voting rights. It enables shareholders to entrust their voting authority to a designated trustee, who then exercises those rights on behalf of the shareholders. — Shareholder Participation: In this arrangement, shareholders voluntarily transfer their shares to the trust, surrendering their direct voting control in favor of a unified decision-making process. Shareholders actively participate in the selection of the trustee and specify the terms, duration, and conditions of the trust agreement. — Trustee's Role: The trustee holds legal title to the shares and exercises the voting rights attached to them as per the trust agreement. The trustee acts in the best interests of the shareholders, ensuring that voting decisions align with their collective wishes. They are obligated to act in a fiduciary capacity and must exercise professional judgment and fairness while making voting decisions. — Duration and Termination: The trust agreement specifies the duration for which the trust exists and the conditions for its termination. Once the trust period expires or predetermined conditions are met, the shares are returned to the participating shareholders, and their direct voting rights are reinstated. Types of Tennessee Voting Trusts: 1. Revocable Voting Trust: This type of voting trust enables shareholders to retain the option to revoke or alter the trust agreement during its duration. It provides flexibility for shareholders if they wish to regain direct control over their shares before the trust's natural termination. 2. Irrevocable Voting Trust: In contrast to revocable trusts, irrevocable voting trusts do not allow shareholders to revoke or amend the trust agreement once established. By committing their shares to the trust, shareholders relinquish their voting control until the trust's predetermined conditions are met. 3. Statutory Voting Trust: Tennessee law recognizes the creation of statutory voting trusts. These trusts adhere to specific regulations set forth by the state legislature, ensuring compliance with legal requirements and providing a clear framework for trust establishment and operation. The Tennessee Voting Trust of Shares in a Closely Held Corporation offers an effective mechanism to consolidate voting control and streamline decision-making within closely held corporations. It provides shareholders with a structured approach to maintain unity and avoid potential conflicts that might arise from individual voting rights.
