Voting Agreements

The voting agreement is an agreement or plan under which two or more shareholders pool their voting shares for a common purpose. It is also known as the pooling arrangement. Shareholders have a fundamental right to vote that cannot be compromised or violated by creation or by control entities. However, the law allows a shareholder to restrict or change his or her right to vote by agreement. A shareholder may transfer his or her right to vote to another person through a transparent trust contract. An agent is created by a written trust agreement in which the original shareholder transfers his shares to an agent who will be held in his or her favour. The purpose of this scheme is to control the vote of the shares and to authorize the agent to choose the shares. The original shareholder retains a favourable interest in the action and, as a general rule, the trust agreement requires that all dividends and distributions be paid to fair owners. The vote on trust contracts may require the agent to vote specifically on certain issues.

Section 6.251 of the Code of Business Organizations states that the agreement should be strikingly included on the certificate; Otherwise, the contract cannot be obtained in value against an acquirer who buys the stock without knowledge of the agreement. However, a person who receives the fund by donation or estate is bound by the agreement as soon as he or she is aware of it. It is important to note that these voting agreements are only valid between shareholders with respect to shareholder votes. They are illegal between directors and should not be used by shareholders to limit the exercise of discretionary action by directors. Moreover, such agreements cannot be applicable if they constitute a simple purchase of votes. B. Unless the voting treaty is otherwise provided, a voting contract in this section is expressly enforceable. » [A.R.S. 10-731] A voting agreement is defined by state status as follows: proxy limited companies can be used to block a majority bloc by combining the voting power of several minority shareholders. It can also be used by minority shareholders to increase the power of their representation.

Sometimes the voting trust can be an instrument of oppression in which a controlling shareholder convinces other minority shareholders to grant them the power of their votes (usually shareholders who are not involved in the transaction or who are very interested, such as children or grandchildren who have inherited their shares in the company) and then use that power to vote their shares against their interests. However, if the trust agreement gives the agent an unbridled discretion in the vote, the agent is still an agent and owes the rightful owner fiduciary duties, including, probably, the obligation to choose the action in the interest of the right owner and not to personally benefit from the right to vote. Shareholders can also join each other in voting on certain issues in a certain way, i.e. voting as a bloc. Such an agreement can sometimes allow a group of shareholders to gain or maintain control, especially when a cumulative vote is allowed. Voting agreements differ from limited companies in that the shareholder remains the shareholder and there is no trust. Section 6.252 of the Business Code provides that these agreements are enforceable if they meet the following requirements: voting agreements may also include the granting of a voting right to another party for the exercise of the vote.