Also known as: voting agreements · shareholders' agreement · voting trust
Written by attorneys · grounded in primary & secondary sources — see below
A contractual arrangement by which corporate shareholders agree that their shares will be voted as a unit. The agreement is formed by signature and is specifically enforceable. It operates independently of voting trust formalities such as share transfer and trustee notice to the corporation.
Virgil Volpe and Valerie Viera each own twenty-five percent of Voss Shipping. They sign a one-page document stating they will vote their shares together to elect a particular slate of directors at the next annual meeting. When the meeting occurs, both cast their votes in accordance with the document and the slate is elected.
Velocity Logistics has three minority shareholders who fear a hostile takeover. They execute a written agreement to vote their combined fifteen percent block against any merger proposal not approved by the board. At the special meeting the block votes as agreed and defeats the proposal.
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Two controlling shareholders of a target corporation sign voting agreements with an acquirer promising to vote their shares in favor of a merger. The agreements also grant the acquirer an irrevocable proxy. When a competing bidder emerges the original acquirer enforces the agreements to secure approval of its deal.
In a family corporation three siblings sign a voting agreement requiring each to vote for the others as directors and to offer shares first to the remaining shareholders on death or retirement. One sibling later attempts to sell shares to an outsider. The agreement is enforced to block the sale.
Shareholders challenging a merger vote allege that management obtained approval through misleading proxy materials. A group of shareholders had previously signed a voting agreement to support the merger. The court examines whether the agreement itself supplied the necessary votes once the proxy defects are corrected.
Executives of a target company enter voting agreements with a favored bidder that commit their shares and grant proxies. A rival bidder sues to enjoin the agreements as improper defensive measures. The court evaluates whether the agreements improperly coerce the shareholder vote.
A voting agreement is formed simply by shareholders signing a contract to vote their shares in a specified manner. No shares are transferred and no trustee is appointed. The agreement remains subject only to ordinary contract rules and is specifically enforceable under Model Bus. Corp. Act § 7.31(b).
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No duration limit applies to a voting agreement under Model Bus. Corp. Act § 7.31. The agreement continues according to its own terms or until the parties amend or terminate it.
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Yes. Model Bus. Corp. Act § 7.31(b) expressly makes a voting agreement created under the statute specifically enforceable. Courts may order a breaching shareholder to vote as promised.
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The statute requires that shareholders sign an agreement, which courts interpret as a writing. Oral understandings alone do not satisfy the formation requirement under Model Bus. Corp. Act § 7.31(a).
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…voting power, agreed unconditionally to vote all of their shares in favor of the Genesis merger. Thus, the combined terms of the voting agreements and merger agreement guaranteed, ab initio , that the transaction proposed by Genesis would obtain NCS stockholder's approval. The Court of Chancery ruled that the voting agreements, when…