A voting trust is a trust whereby the shares

Stock

The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...

 in a company of one or more shareholders and the voting rights attached thereto are legally transferred to a trustee

Trustee

Trustee is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another...

, usually for a specified period of time (the "trust period"). In some voting trusts, the trustee may also be granted additional powers (such as to sell or redeem the shares). At the end of the trust period, the shares would ordinarily be re-transferred to the beneficiary(ies)

Beneficiary (trust)

In trust law, a beneficiary or cestui que use, a.k.a. cestui que trust, is the person or persons who are entitled to the benefit of any trust arrangement. A beneficiary will normally be a natural person, but it is perfectly possible to have a company as the beneficiary of a trust, and this often...

, although in practice many voting trusts contain provisions for them to re-vested on the voting trusts with identical terms.

Voting trusts were made popular in Delaware

Delaware

Delaware is a U.S. state located on the Atlantic Coast in the Mid-Atlantic region of the United States. It is bordered to the south and west by Maryland, and to the north by Pennsylvania...

 corporate law

Corporate law

Corporate law is the study of how shareholders, directors, employees, creditors, and other stakeholders such as consumers, the community and the environment interact with one another. Corporate law is a part of a broader companies law...

, but they have since been adopted widely by other states in the U.S.A.  They have also been extensively adopted in offshore jurisdictions

Offshore financial centre

An offshore financial centre , though not precisely defined, is usually a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds....

.

Purposes

There are several reasons why shareholders may wish to put a voting trust arrangement in place.

• Several shareholders may wish to create a unified block of votes, which together gives them more power than the collective sum of their fragmented interests.
• In many countries, in order to call general meetings, shareholders need to hold a certain percentage of the issued shares of the company. By aggregating their shares, the shareholders can confer this power on themselves collectively where they might not have it individually.
• Locking shares up in voting trusts can in some countries help deter a hostile takeover.
• Voting trusts are also sometimes used to resolve conflicts of interest
  Conflict of interest
  A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other....
  
  . By putting the shares in a trustee who can vote them at arm's-length from the beneficiary(ies) of the trust, this can in some circumstances mitigate or absolve the original shareholder from what might otherwise constitute a conflict of interest (although in practice, to resolve conflicts of interest the trust will ordinarily be "blind trust
  Blind trust
  A blind trust is a trust in which the fiduciaries, namely the trustees or those who have been given power of attorney, have full discretion over the assets, and the trust beneficiaries have no knowledge of the holdings of the trust and no right to intervene in their handling...
  
  "; while all blind trusts are necessarily voting trusts, not all voting trusts are blind trusts).
• Shares are sometimes aggregated into a voting trust to facilitate a corporate reorganisation.
• Promoters of companies sometimes aggregate their shares in a voting trust to safeguard control of the company.

Sample

Sample Voting trust agreement