Closely held corporations are those in which a small group of shareholders control the operating and managerial policies of the corporation. Most, but not all, closely held corporations are also family businesses. Family businesses may be defined as those companies where the link between the family and the business has a mutual influence on company policy and on the interests and objectives of the family.
A voting trust is a device for combining the voting power of shareholders. It is not unlawful for shareholders to combine their voting stock for the election of directors so as to obtain or continue the control or management of a corporation. Some state laws limit the duration of voting trusts to a period of a certain number of years.
The Mississippi Voting Trust of Shares in a Closely Held Corporation is a legal mechanism that allows a group of shareholders to collectively exercise voting rights on behalf of their shares. This type of trust is typically established in situations where a closely held corporation has many shareholders who may not be able to effectively coordinate their voting preferences individually. In a closely held corporation, a small group of shareholders usually hold a significant majority of the shares, which can impact decision-making processes. However, through the establishment of a voting trust, shareholders who may not have controlling interests individually can pool their shares together to create a unified voting bloc. The Mississippi Voting Trust of Shares in Closely Held Corporation is governed by the Mississippi Business Corporation Act, and it requires a written agreement or declaration to establish the trust. The agreement outlines the trust's purpose, duration, trustee, voting rights, and any other provisions specific to the trust. There are two common types of voting trusts within a closely held corporation: 1. Voluntary Voting Trust: This type of trust is established by shareholders who voluntarily enter into an agreement to transfer their voting rights to a designated trustee. The trustee is then responsible for voting on behalf of the trust's beneficiaries in accordance with the terms outlined in the trust agreement. 2. Involuntary Voting Trust: In certain situations, the court may order the creation of an involuntary voting trust if it determines that it is necessary to protect the interests of the corporation or its shareholders. This could happen, for example, if there is a dispute among shareholders that hinders effective decision-making or threatens the corporation's stability. The court-appointed trustee assumes the responsibility of voting the shares held in the trust. Both types of voting trusts aim to consolidate voting power in order to streamline decision-making processes and provide greater control over corporate governance. The Mississippi Voting Trust of Shares in Closely Held Corporation offers a practical solution for closely held corporations that have fragmented ownership but require coordinated actions to maintain stability and facilitate effective management.
