The trustee is the shareholder of record for corporate law purposes. As a fiduciary for these shares (or as directed by the entity or person acting as fiduciary), the trustee has all the rights any other shareholder would. These rights vary from state to state as corporate law is a state law issue. They include such things as voting for board members, receiving corporate information, being notified of shareholder meetings, being able to vote for fundamental changes in the corporation, and protection against unfair diminution of value (such as buying out other shareholders with comparable ownership interests at a higher price).
There is no body of law, however, even suggesting just how the trustee/fiduciary should exercise these rights beyond the very minimal requirements of the law. While the trustee/fiduciary clearly could become a very active shareholder, it is not clear if there is a requirement to do so and, if so, under what circumstances. For instance, if the trustee/fiduciary knows management is self-dealing or making very poor decisions, should it intervene? Does it have an obligation to intervene? The Department of Labor has issued guidelines for all ERISA fiduciaries indicating that they have an obligation to review broad corporate operations, such as the composition of the board, appropriate personnel practices, and general strategic decisions, but these guidelines have not yet been tested in court with respect to ESOPs.
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