Voting trust agreements, which must be filed with the Securities and Exchange Commission (SEC), determine the duration of the agreement, typically for several years or until a specific event occurs. A voting trust agreement is a contractual arrangement in which voting shareholders transfer their shares to a trustee in exchange for a voting trust certificate. This gives voting trustees temporary control of the company. At the end of the escling period, the shares are generally returned to shareholders, although in practice many voting trusts contain provisions that they are reversed on voting trusts with identical terms. They also describe the rights of shareholders, such as.B. the continued receipt of dividends; merger procedures, such as consolidation or dissolution of the company; and the duties and rights of trustees, e.B. what votes are for. In some voting Russias, the proxy may also be granted additional powers, such as the freedom to sell or exchange shares. Voting trusts are similar to proxy voting in the sense that shareholders designate another person to vote for them. But voting trusts work differently than a proxy. While the proxy can be a temporary or single agreement, often established for a given vote, the voting trust is usually more permanent to give more power to a block of voters than a group – or even control of the company, which is not necessarily the case for proxy voting. The details of a voting trust agreement, including the timing in which it continues and the specific rights, are presented in a filing with the SEC.
Voting trust agreements are usually operated by the current directors of a company as a counter-measure to hostile acquisitions. However, they can also be used to represent a person or group trying to take control of a company – for example. B creditors of the company who might want to reorganize a bankrupt company. Voting trusts are more common in small businesses because they are easier to manage….