A voting trust is an arrangement whereby the

shares In financial markets, a share is a unit of equity ownership in the capital stock of a corporation, and can refer to units of mutual funds, limited partnerships, and real estate investment trusts. Share capital refers to all of the shares of an ...

in a

company A company, abbreviated as co., is a legal entity representing an association of people, whether natural, legal or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared go ...

of one or more

shareholders A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the legal ow ...

and the voting rights attached thereto are legally transferred to a

trustee Trustee (or the holding of a trusteeship) is a legal term which, in its broadest sense, is a synonym for anyone in a position of trust and so can refer to any individual who holds property, authority, or a position of trust or responsibility to ...

, usually for a specified period of time (the "trust period"). In some voting trusts, the trustee may also be granted additional powers (such as to sell or redeem the shares). At the end of the trust period, the shares would ordinarily be re-transferred to the

beneficiary A beneficiary (also, in trust law, '' cestui que use'') in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor. For example, the beneficiary of a life insurance policy is the person ...

, although in practice many voting trusts contain provisions for them to re-vested on the voting trusts with identical terms. Voting trusts were made popular in

Delaware Delaware ( ) is a state in the Mid-Atlantic region of the United States, bordering Maryland to its south and west; Pennsylvania to its north; and New Jersey and the Atlantic Ocean to its east. The state takes its name from the adjacent De ...

corporate law, but they have since been adopted widely by other states in the United States. They have also been extensively adopted in offshore jurisdictions.

Purposes

There are several reasons why shareholders may wish to put a voting trust arrangement in place. * Several shareholders may wish to create a unified block of votes, which together gives them more power than the collective sum of their fragmented interests. * In many countries, to call general meetings, shareholders need to hold a certain percentage of the issued shares of the company. By aggregating their shares, the shareholders can confer this power on themselves collectively where they might not have it individually. * Locking shares in voting trusts can, in some countries, help deter a

hostile takeover In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to ...

. * Voting trusts are sometimes used to resolve conflict of interest/conflicts of interest. By putting the shares in a trustee who can vote them at arm's length from the beneficiary(ies) of the trust, this can in some circumstances mitigate or absolve the original shareholder from what might otherwise constitute a conflict of interest (although in practice, to resolve conflicts of interest the trust will ordinarily be " blind trust"; while all blind trusts are necessarily voting trusts, not all voting trusts are blind trusts). * Shares are sometimes aggregated into a voting trust to facilitate a corporate reorganization. * Promoters of companies sometimes aggregate their shares in a voting trust to safeguard control of the company.

Sample

Sample Voting trust agreement
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