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.
South Dakota Voting Trust of Shares in Closely Held Corporation is a legal arrangement that allows shareholders of a closely held corporation to transfer their voting rights to a trustee. This arrangement provides various benefits and safeguards for shareholders, ensuring the efficient management and decision-making within the corporation. One type of South Dakota Voting Trust is the South Dakota Statutory Voting Trust. This trust is established in accordance with the South Dakota Statutory Voting Trust Act, which outlines the requirements and procedures for creating and maintaining a voting trust. It offers a convenient and trust-based structure for shareholders to collectively exercise control over the corporation. Another type of South Dakota Voting Trust is the South Dakota Common Law Voting Trust. While not governed by specific statutory provisions, this trust is established based on common law principles and is customarily used for closely held corporations in South Dakota. It provides flexibility and allows the trust agreement to be tailored to the specific needs and goals of the shareholders. The primary purpose of a South Dakota Voting Trust is to consolidate voting power and facilitate decision-making within the corporation. By pooling voting rights in a single trustee, shareholders can streamline the decision-making process, avoid deadlocks, and ensure the continuity and stability of corporate governance. Additionally, a South Dakota Voting Trust can offer shareholders protection and security. The trustee acts as a fiduciary, representing the interests of the shareholders and making decisions based on their instructions or the best interests of the corporation. This helps reduce conflicts and disputes among shareholders, ensuring a harmonious and efficient operation of the corporation. Creating a South Dakota Voting Trust involves drafting a trust agreement that outlines the terms and conditions of the trust. This agreement specifies the powers and duties of the trustee, the rights and responsibilities of the shareholders, and the procedures for exercising voting rights. It also determines the duration of the trust and the requirements for transferring shares into and out of the trust. In order to establish a valid South Dakota Voting Trust, certain legal formalities must be met. These may include obtaining the consent of the corporation's board of directors, notifying all shareholders of the trust's creation, executing the trust agreement in writing, and filing the necessary documents with the appropriate state authorities. In conclusion, a South Dakota Voting Trust of Shares in a Closely Held Corporation provides an effective mechanism for shareholders to consolidate their voting rights and improve corporate governance. Whether established under the South Dakota Statutory Voting Trust Act or based on common law principles, this arrangement offers numerous benefits, including streamlined decision-making, conflict resolution, and protection for shareholders.
