"The trial judge determined that the McCormick-Patterson Trust is a voting trust. We agree. By its terms the trustees are fully empowered to vote all shares of stock held by the trust. The beneficiaries retain virtually complete enjoyment of all other beneficial incidents of ownership of the company stock represented by their interests in the trust corpus, subject only to normal provisions to protect the trustees from liability for mistaken transfers of trust interests and to insure that the trust can continue to function smoothly and to meet its expenses in a timely fashion. The separation of voting rights from the other aspects of beneficial ownership is for a stated and definite period of time, and is irrevocable except by extraordinary vote of the beneficiaries to terminate the trust. The manifest purpose of the trust is to insure continuity in management of the company through the maintenance of voting control in a select group of persons."
Voting trust
Definition
A trust formed when individual shareholders transfer both the legal title and voting rights in their shares to a trustee. The trustee then controls a unified voting block - with a stronger voice on matters of corporate governance than the individual shareholders could have on their own. Voting trusts are created to last for a specified period of time, and represent one way to defend against hostile takeovers.
See also
Definition from Nolo’s Plain-English Law Dictionary
A trust created to combine the voting power of shareholders. The participating shareholders' shares and their accompanying voting rights are transferred to a trust for a designated period of time. A designated trustee votes to elect a board directors or vote on other important matters at a shareholders' meeting. A voting trust is usually established by current directors to ensure continued control, but occasionally a voting trust represents a person or group trying to gain control of the corporation.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:26 pm
