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.
Texas Voting Trust of Shares in Closely Held Corporation is a legal mechanism that allows shareholders of closely held corporations in Texas to consolidate their voting rights under one entity known as the voting trust. This trust is established to ensure the efficient and unified voting process among shareholders, especially in situations where a significant number of shareholders are involved. The creation of a Texas Voting Trust of Shares in Closely Held Corporation involves transferring the legal title of shares from individual shareholders to the voting trust. The trustees, who are typically chosen from among the shareholders, then exercise the voting rights attached to these shares in accordance with the trust agreement. By doing so, the trust acts as a central body representing the collective voting power of the shareholders. This arrangement provides several benefits for shareholders in a closely held corporation. Firstly, it helps streamline the decision-making process within the corporation by eliminating the need for individual shareholders to vote separately. Furthermore, it can enhance the corporation's stability and reduce the potential for internal disputes or deadlocks, as decisions are made collectively through the voting trust. There are different types of Texas Voting Trusts, including revocable and irrevocable trusts. In a revocable voting trust, the shareholders who initially establish the trust can terminate it or modify its terms at any time. On the other hand, an irrevocable voting trust is binding, and the shareholders cannot easily revoke or alter the trust agreement once it is established. Additionally, Texas Voting Trust of Shares in Closely Held Corporation can either be a testamentary or an inter vivos trust. A testamentary trust is created in a shareholder's will and takes effect only upon their death. Conversely, an inter vivos trust is established during the shareholder's lifetime. It is crucial to note that the establishment and administration of a Texas Voting Trust of Shares in Closely Held Corporation must comply with all relevant Texas laws and regulations. Consulting with a qualified attorney specializing in corporate law is highly recommended ensuring all legal requirements are met and to draft a comprehensive trust agreement that addresses the specific needs and objectives of the closely held corporation and its shareholders.
