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 New Mexico Voting Trust of Shares in Closely Held Corporation is a legal arrangement that allows shareholders of closely held corporations to transfer their voting rights to a trust for a specified period of time. This trust acts as a custodian of the shares, ensuring that they are managed in the best interests of the shareholders and the corporation. The voting trust is commonly utilized when there is a need for consolidated control and decision-making within a closely held corporation. It is especially beneficial when shareholders want to ensure a unified front in corporate decision-making or when there is a need to circumvent potential conflicts of interest among shareholders. In New Mexico, there are different types of voting trusts available for closely held corporations, each with specific features and requirements. These include: 1. Revocable Voting Trust: This type of trust allows the shareholders to revoke the trust agreement at any time and regain their voting rights. It provides flexibility and allows for easy adjustments to the voting structure. 2. Irrevocable Voting Trust: As the name suggests, this type of trust cannot be revoked or terminated by the shareholders once it is established. The irrevocability provides stability and ensures long-term commitment to the trust's objectives. 3. Voting Trust Agreement: This is a formal legal document that outlines the terms and conditions of the trust, including the duration, voting rights, and responsibilities of the trustees. It serves as the governing document for the trust and ensures clarity in the management of shares. 4. Beneficiary Voting Trust: In this type of trust, the shareholders transfer their voting rights to a trustee for the benefit of a particular beneficiary or a group of beneficiaries. It allows for specific individuals or entities to have the power to influence corporate decisions based on their interest in the company. Overall, the New Mexico Voting Trust of Shares in Closely Held Corporation provides an effective mechanism to consolidate voting power and decision-making in closely held corporations. It ensures that shareholders have control over their shares while promoting unity and streamlining corporate governance.
