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Legal Notices What Is a Voting Trust Agreement?A voting trust agreement is a contractual agreement in which shareholders with voting rights transfer their shares to a trustee, in return for a voting trust certificate. This gives the voting trustees temporary control of the corporation. Details of a voting trust agreement, including the timeframe that it lasts and the specific rights, are laid out in a filing with the SEC. How a Voting Trust Agreement WorksVoting trust agreements are usually operated by the current directors of a company, as a countermeasure to hostile takeovers. But they may also be used to represent a person or group trying to gain control of a company—such as the company's creditors, who may want to reorganize a failing business. Voting trusts are more common in smaller companies, as it is easier to administer them. Voting trusts are similar to proxy voting, in the sense that shareholders designate someone else to vote for them. But voting trusts operate differently from a proxy. While the proxy may be a temporary or one-time arrangement, often created for a specific vote, the voting trust is usually more permanent, intended to give a bloc of voters increased power as a group—or indeed, control of the company, which is not necessarily the case with proxy voting. Requirements for a Voting Trust AgreementVoting trust agreements, which have to be filed with the Securities and Exchange Commission (SEC), specify how long the agreement lasts for—which is usually for a number of years, or until a certain event happens. They also outline the rights of the shareholders, such as the ongoing receipt of dividends; procedures in the event of a merger, such as consolidation or dissolution of the company; and the duties and rights of trustees, such as what the votes will be used for. In some voting trusts, the trustee may also be granted additional powers, like the freedom to sell or redeem the shares. At the end of the trust period, the shares are usually returned to the shareholders, although in practice many voting trusts contain provisions for them to be revested on the voting trusts with identical terms. Key Takeaways
a)Shareholders have the right to vote in an election of corporate directors.b)Shareholders have the right to vote regarding fundamental changes in the corporation.c)Shareholders are not agents of the corporation.d)A corporation's shareholders own the corporation.e)Shareholders have comprehensive management duties. If a shareholders' meeting is not held within either15monthsof the last annual meeting or6monthsafter the end of the corporation's fiscal year, whichever is earlier, a shareholder may petition the court toorder the meeting held.Which of the following is anINCORRECTstatement regarding shareholders' meetings? Which of the following is anINCORRECTstatement regarding corporate voting requirements?. The articles of incorporation or the bylaws of a corporation can require a greater than majority of theshares to constitute a quorum of the vote of the shareholders. This is called asupramajorityvotingrequirement.Which of the following is anINCORRECTstatement regarding shareholder voting trusts? b)A voting trust agreement must be in writing.c)A voting trust agreement cannot exceed ten years.d)A voting trust is an arrangement whereby shareholders transfer their stock certificates to atrustee.e)A voting trust must be filed with the corporation and is open to inspection by shareholders of thecorporationWhich of the following is anINCORRECTstatement regarding shareholder voting agreements? Which of the following actions does not require shareholders approval quizlet?The best answer is B. Dividend decisions are made by the Board of Directors - no shareholder approval is required.
Which of the following are rights of common shareholders choose 3 answers?Common shareholders are the last to have any debts paid from the liquidating company's assets. Common shareholders are granted six rights: voting power, ownership, the right to transfer ownership, dividends, the right to inspect corporate documents, and the right to sue for wrongful acts.
Which of the following is an incorrect statement regarding the corporate form of business organization?Answer and Explanation: Out of the statements pertaining to the definition of a corporation, the incorrect among all statements is O The corporation is the easiest form of business organization to establish.
Which of the following is an agreement that requires a selling shareholder to offer his shares for sale to the other parties to the agreement before selling them to anyone else?A right of first refusal is an agreement that shareholders enter into whereby they grant each other the right of first refusal to purchase shares they are going to sell. A selling shareholder must offer to sell his or her shares to the other parties to the agreement before selling them to anyone else.
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Which of the following is an incorrect statement regarding shareholder voting trusts?
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