Voting Trust Agreements in Australia: 2025 Guide

Voting trust agreements are a little-known but powerful tool that can transform how control is exercised within Australian companies. With 2025 bringing renewed scrutiny to corporate governance and shareholder rights, understanding these agreements is more important than ever—whether you’re an investor, company director, or part of a family-run business.

What is a Voting Trust Agreement?

A voting trust agreement is a legal arrangement where one or more shareholders transfer their shares’ voting rights to a trustee. The trustee then votes on their behalf, typically for a specified period. While the underlying ownership remains with the original shareholder, the power to vote at company meetings is exercised by the trustee according to the terms of the agreement.

Key features include:

• Duration: Voting trusts often last several years, with renewal or termination conditions set upfront.
• Scope: The trustee may be instructed to vote a certain way, or given discretion to act in the best interests of the trust participants.
• Confidentiality: Terms may remain private, though disclosure obligations exist under Australian corporate law for substantial shareholdings.

Why Use a Voting Trust Agreement?

In 2025, the landscape of Australian business is marked by complex ownership structures and a surge in activist investing. Voting trust agreements serve several strategic purposes:

• Consolidating Control: Founders or major shareholders can maintain influence, especially during succession or when seeking investment.
• Facilitating Mergers & Acquisitions: Buyers may use voting trusts to streamline negotiations or ensure support for major resolutions.
• Resolving Disputes: In family businesses, trusts can prevent deadlocks by vesting voting power in a neutral third party.
• Regulatory Compliance: Certain industries require demonstrable separation of economic interest and voting control (e.g., media, banking), which voting trusts can facilitate.

Real-world example: In 2024, a Queensland agribusiness used a voting trust to ensure board stability during a generational transfer, allowing new family members to inherit economic benefits without disrupting governance.

2025 Legal and Regulatory Update

Australian regulators have sharpened their focus on transparency and the potential for abuse in voting trust arrangements. The Corporations Amendment (Shareholder Disclosure) Act 2025 introduced stricter disclosure rules for beneficial ownership and voting agreements. Key changes include:

• Mandatory Disclosure: Any voting trust controlling more than 5% of a listed company’s shares must be disclosed to the ASX and ASIC.
• Anti-Avoidance Provisions: New measures target attempts to use trusts to circumvent takeover or substantial holding laws.
• Trustee Duties: Trustees are now subject to enhanced fiduciary obligations, including conflict-of-interest reporting and record-keeping requirements.

These reforms aim to balance the legitimate use of voting trusts with the need for market integrity and shareholder protection. For private companies, tailored agreements remain common, but legal advice is increasingly sought to ensure compliance with evolving standards.

Considerations for Shareholders and Directors

Before entering a voting trust agreement, stakeholders should weigh the following:

• Alignment of Interests: Is the trustee truly independent, or aligned with certain shareholders?
• Exit Mechanisms: What happens if parties want to end the agreement early?
• Impact on Value: Will potential buyers or investors view the trust as a risk or a stabilising force?
• Tax Implications: While voting trusts typically do not transfer beneficial ownership, stamp duty and CGT consequences should be checked for complex arrangements.

Directors, meanwhile, must ensure board decisions respect the voting power structure and do not inadvertently breach the agreement or corporate law. Regular reviews of voting trust terms are prudent, especially following significant legal or regulatory updates.