Voting Trust

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DEFINITION

A legal trust created to combine the voting power of shareholders. With the establishment of the voting trust, the shareholders' legal title (their stock) and voting rights are transferred to a designated trustee for a set duration.

INVESTOPEDIA EXPLAINS

There are many reasons stockholders may wish to form these trusts. For example, they may create one in the hopes of maintaining control within a corporation through a unified vote. Or they may want to use it as a form of protection from corporate creditors. The laws of different states usually have limitations on the duration of a trust, as it is a legally binding agreement.


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