Members can appoint a proxy to speak or vote for them. Proxies can vote by showing their hands or by filling out an official ballot. Members and proxies must adhere to all proxy voting regulations in order for votes to be counted as legitimate.
The regulations for proxy voting are outlined in state legislation and the corporation’s bylaws, including how to permit and withdraw proxy votes. For-profit businesses and non-profit organizations have slightly different rules.
Definitions of a Proxy for a Board Meeting
A proxy is a written declaration signed by a shareholder (or unit owner in a homeowner association) authorizing another person to vote the shareholder’s shares or common interests at a shareholder or special interest meeting. A general proxy signifies that the voting member delegated the vote to the proxy voter’s discretion. A particular proxy, also known as a limited proxy, is one in which the voting member provides explicit instructions to the proxy voter on how to cast the member’s vote.
Voting by Proxy is governed by a set of rules
The regulations for proxies are listed in Robert’s Rules of Order. To guarantee an unbiased and democratic vote, the proxy should be kept apart from the other voting members.
For stock businesses, Robert’s Rules explains how proxy voting works. The objective of a stock corporation’s annual meeting is to elect directors to the board of directors. For the election, the corporation must provide proxies to the members. The proxy has no further function or voting authority once the election is over.
State laws take precedence over a corporation’s bylaws, therefore if a state law enables all companies’ members to designate proxies at all business meetings, the bylaws cannot prohibit proxy voting. In most cases, state regulations only apply to the use of proxies to elect directors and officers.
The Use of Proxies as a Strategy
Some boards’ bylaws prohibit members from using proxies during regular or special board meetings, but they may allow them to be used at the annual meeting. A quorum is required for most boards to undertake voting, and proxies can help achieve a quorum. Some boards have a normal practice of having the secretary send out reminder notifications to board members before the annual meeting, requesting that they turn in proxy notices if they will not be present, so their attendance would be counted toward the quorum count. Shareholders may send a proxy notice even if they intend to attend the meeting, just in case anything unexpected comes up at the last minute.
What if a member doesn’t truly want to vote on a certain issue? Members can elect not to nominate a proxy and not to attend the meeting in order to avoid having to vote.
A member’s proxy may be counted exclusively for the purpose of achieving a quorum, not as a vote for or against an issue, depending on the bylaws of the organization.
Keeping a Conflict of Interest at Bay
To prevent a conflict of interest and maintain the integrity of the voting process, board members sometimes use independent employees or proprietors of the managing agent.
Proxies are being revoked
Members can cancel proxies, but they can’t rescind votes that have already been cast on a ballot. It’s critical that any instructions for granting authorisation or removing it be written down.