A Shareholder Voting Agreement is a legal contract among shareholders of a corporation relating to the voting of shares. The shareholder voting agreement generally covers how members of the Board of Directors are to be elected and sometimes covers key corporate events such as mergers and acquisitions. Venture capital investors typically expect a shareholder voting agreement to be executed in connection with their investment in a start off up corporation.

Voting Agreements are enforceable pursuant to state statutes enacted in all 50 states. For instance, the pertinent statute of Indiana’s State Statutes reads: Sec. two.

(a) Two (two) or a lot more shareholders might provide for the manner in which they will vote their shares by signing an agreement for that goal.

(b) A voting agreement made below this section is not topic to the provisions of section 1 of this chapter.

Frequently Shareholders may possibly opt for to pool their votes for a specific purpose. Voting agreements may perhaps specify that the involved shareholders will vote their shares collectively or cooperatively. Courts commonly uphold shareholder voting agreements as extended as they relate to concerns upon which shareholders can vote.

For buy facebook contest votes , lets say Don and Mike are shareholders of Detric Pesticide, Inc. Let us say that neither of them likes Ben, a different shareholder, and they want to formally agree that neither of them will ever vote for Ben for a seat on the board of directors. In addition, they also include things like a provision that if they are outvoted on this matter, they will attempt to convince the firm to pay Ben less than the other directors.

In this hypothetical, the initial aspect of the agreement is valid simply because it relates to an challenge on which Mike and Jessica can vote. They can legally agree, via shareholder voting agreement, not to vote for Ben. The second provision cannot be enforced, nevertheless, as a shareholder voting agreement mainly because Ben’s pay is inside the discretion of the board of directors and will not come up for shareholder vote.

Voting pools could specify precisely how the participating shares must be voted, or they could permit for negotiation and agreement for every single individual problem. Lots of voting pools include things like an alternative dispute resolution procedure for reaching agreement on such problems.

Some states need that voting pools comply with precise guidelines to be valid. These laws might limit the length of a shareholder agreement, or may possibly need that the shareholders deposit a copy of the agreement with the corporation. If a party to a valid voting agreement violates the agreement, the other parties may well sue the uncooperative celebration. Courts might call for that the dissenting shareholder vote according to the agreement, or they may possibly disqualify violating votes.