Which statements are true about a voting trust?

Which statements are true about a voting trust?

• A. Transfer title to trustee
• B. 10-year term extendable by notice
• C. Signed writing and copy to corporation
• D. All of the above

Answer: (D)

Voting trusts work by having stockholders turn over the voting power of their shares to a trustee under a written agreement. The trustee holds legal title to the shares for the duration of the trust and votes the shares as directed by the beneficiaries, who retain the beneficial ownership for purposes like dividends and other rights as allowed by the arrangement. The term of a voting trust is limited to ten years, but the agreement can provide for extensions, typically through a notice mechanism that lets the trust continue for additional fixed periods if the parties choose. A voting trust must be evidenced by a signed writing, and a copy of that agreement must be delivered to the corporation whose shares are being voted so the issuer knows who is exercising the voting rights. All of these features—transfer of title to a trustee, a ten-year term with possible extensions by notice, and a signed writing with a copy to the corporation—are consistent with how voting trusts operate.

Voting trusts work by having stockholders turn over the voting power of their shares to a trustee under a written agreement. The trustee holds legal title to the shares for the duration of the trust and votes the shares as directed by the beneficiaries, who retain the beneficial ownership for purposes like dividends and other rights as allowed by the arrangement.

The term of a voting trust is limited to ten years, but the agreement can provide for extensions, typically through a notice mechanism that lets the trust continue for additional fixed periods if the parties choose.

A voting trust must be evidenced by a signed writing, and a copy of that agreement must be delivered to the corporation whose shares are being voted so the issuer knows who is exercising the voting rights.

All of these features—transfer of title to a trustee, a ten-year term with possible extensions by notice, and a signed writing with a copy to the corporation—are consistent with how voting trusts operate.