Also known as: shareholder voting agreements · shareholders voting agreement · shareholders' voting agreement · voting agreement · shareholders agreement
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 arrangement is formed when two or more shareholders sign a written agreement specifying how they will vote on designated matters. Such an agreement is specifically enforceable by court order against a breaching signatory.
Lena, Marco, and Quinn signed a written agreement to vote their shares in BrightForge Manufacturing against any sale of the company's factory. When the board later proposed a sale, Marco and Quinn voted in favor. Lena obtained a court order compelling Marco and Quinn to vote their shares against the sale in accordance with the signed agreement.
Outcalt and Shaw, controlling shareholders of NCS Health Care, signed voting agreements with Genesis committing to vote their shares in favor of a merger. The agreements also granted Genesis irrevocable proxies. When a competing bidder emerged, the agreements prevented the shareholders from supporting the rival offer and ensured the Genesis transaction received the required votes.
Select any source to read its text and confirm it supports the definition.
No. The agreement is a private contract among the signing shareholders. It is valid and specifically enforceable when the shareholders sign a writing that states how they will vote their shares, without any requirement that the corporation adopt it as a bylaw or amend its articles.
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Yes. The statute expressly makes voting agreements specifically enforceable. A court may therefore compel a breaching shareholder to cast votes as the agreement requires rather than merely awarding damages.
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No. The agreement binds only the shareholders who sign it. It remains enforceable among the signatories even if other shareholders do not join or ratify the arrangement.
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A voting agreement is a contract among shareholders that does not require transfer of shares or appointment of a trustee. A voting trust requires both a trust agreement and transfer of legal title to a trustee who then votes the shares. Voting agreements are not subject to the statutory rules governing voting trusts.
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…and - Outcalt and Shaw granted to Genesis an irrevocable proxy to vote their shares in favor of the merger agreement. - The voting agreement was specifically enforceable by Genesis. The merger agreement further provided that if either Outcalt or Shaw breached the terms of the voting agreements, Genesis would be entitled to…