Pooling agreements are legal documents, usually associated with a voting trust, by which two or more shareholders of a company appoint a trustee and agree to transfer their voting rights to the trustee. Every shareholder who has bought a stock in a company has the right to vote on several shareholder resolutions. By ‘pooling’ or combining their voting powers and transferring those voting rights to the trustee, they increase that trustee’s influence on different corporate decisions and strategies.
Every pooling agreement must mention its duration or maximum period, usually 5 years, after which the agreement will expire and the voting rights will go back to the shareholders. They were first popularized in the state of Delaware and now more states have started to accept them. Big companies which are on the verge of bankruptcy are controlled by bank syndicates who most of the time do not have enough shares in the company, but can use pooling agreements in order to have some control over the management.
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