California has multiple types of nonprofit corporations. The "Big Three" are the public benefit corporation, mutual benefit corporation and religious corporation. The statutes applicable to these three entities are similar in most respects but there are significant differences. One such difference relates to voting agreements and voting trust agreements.
Corporations Code Section 5614 prohibits, without exception, the enforcement of a voting agreement or voting trust agreement in the case of a public benefit corporation:
A voting agreement or voting trust agreement entered into by a member or members of a corporation shall not be enforced.
This ban applies to agreements entered into by "members", which in the case of a public benefit corporation is defined in Section 5056 as any person who pursuant to a specific provision in the corporation's articles or bylaws has the right to vote for the election of director(s), on a disposition of all or substantially all of the corporation's assets, on a merger, on a dissolution, or on changes to the articles or bylaws. Many public benefit corporations refer to affiliated persons as "members" but these so-called members are not members for purposes of Section 5056. Cal. Corp. Code ยง 5332.
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