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 Virgin Islands Voting Trust of Shares in a Closely Held Corporation is a legal arrangement that allows shareholders of a closely held corporation in the Virgin Islands to transfer their voting rights to a trustee. This trust structure is often used in situations where shareholders want to maintain their ownership in the corporation but delegate their voting power to a trusted individual or entity. In simple terms, a voting trust is an agreement between shareholders, whereby they transfer their shares to a trustee who holds the shares for a specific period of time. The trustee then exercises the voting rights associated with the shares as directed by the shareholders, ensuring that their interests are represented in corporate decision-making processes. There are a few different types of voting trusts that may be established in the Virgin Islands for closely held corporations: 1. Fixed-Term Voting Trust: This type of trust has a predetermined expiration date. Once the term ends, the voting trust is dissolved, and the shares are returned to the original shareholders. This allows for temporary consolidation of voting power to achieve specific objectives or resolutions. 2. Revocable Voting Trust: In a revocable voting trust, shareholders retain the ability to revoke the trust arrangement at any time. This gives them flexibility if they wish to regain control over their voting rights or transfer the shares to a different trustee. 3. Irrevocable Voting Trust: As the name suggests, an irrevocable voting trust cannot be revoked or modified once it is established. The shareholders permanently transfer their voting rights to the trustee, granting them full authority to exercise those rights according to the terms of the trust agreement. 4. Voting Trust Agreement: A voting trust agreement is the legal document that outlines the terms and conditions of the trust arrangement. It typically includes details about the trustee's responsibilities, the duration of the trust, voting instructions, and any provisions for the transfer or sale of shares held in trust. Establishing a voting trust of shares in a closely held corporation in the Virgin Islands provides shareholders with a reliable mechanism to ensure their votes are counted and their influence is maintained, even if they are unable or unwilling to participate directly in corporate governance. It offers a practical solution to consolidate voting power, protect shareholder interests, and facilitate decision-making processes within closely held corporations.
