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Voting Trust

Definition - What does Voting Trust mean?

A voting trust is a trust that is created by two or more shareholders of a corporation for the purpose of transferring voting rights to the trust. Shareholders often do this in order to consolidate voting powers so that they can more effectively control decisions made by the corporation.

Voting trusts are legally binding.

Justipedia explains Voting Trust

Because voting trusts are legally binding, it means that the trustee legally possesses voting rights on behalf of the shareholders who set it up. Different states have different rules about the length of time that a voting trust can retain this power.

The more shareholders involved in the trust, the stronger the vote that comes from the voting trust. Votes from voting trusts can be used for decisions that shareholders are allowed to vote on, such as appointing a board member.

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