Also known as: voting agreement · shareholder voting agreement
Written by attorneys · grounded in primary & secondary sources — see below
A contract among shareholders by which they agree on the manner in which they will vote their shares. The agreement is specifically enforceable by court order compelling performance.
Virgil Volpe, Vera Vu, and Victoria Vernon own shares in a closely held manufacturing firm. They sign a written agreement stating they will vote together against any sale of the company's only factory. When the board later proposes a sale, Vera and Victoria vote in favor. Virgil sues and obtains a court order requiring them to vote against the sale as promised.
Two controlling shareholders of a healthcare company sign voting agreements committing their shares to support a merger with Genesis. The agreements combine with merger terms that require a stockholder vote even if the board later withdraws support. A competing bidder challenges the arrangement after the board changes its recommendation. The court treats the agreements as valid and specifically enforceable commitments that lock in the outcome.
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Viola Volkov and Vincente Vukovic purchase minority stakes in a Delaware corporation. They negotiate and sign a voting agreement that coordinates their votes on director elections and major transactions. Later disputes arise over whether the agreement can alter default voting allocations. The court upholds the agreement as a valid private contract that shareholders may use to order their voting rights.
No. The agreement is a private contract among the signing shareholders. It need not be incorporated into the bylaws or articles or approved by the board.
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Yes. The statute provides that a voting agreement created under section 7.31 is specifically enforceable, allowing a court to order breaching shareholders to vote as promised.
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Voting agreements are simple contracts that leave legal and equitable title with the shareholders. Voting trusts require transfer of shares to a trustee and compliance with additional formalities such as preparing a beneficial-owner list.
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Yes. In a closely held corporation, a unanimous written shareholder agreement may reallocate or govern the exercise of voting power, including weighted director voting, even if inconsistent with default statutory rules.
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Yes. When the agreement is properly executed and made known to the corporation, a subsequent purchaser is bound by its terms.
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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…