Definition
A Proxy is an individual designated to act on behalf of a shareholder or member of a company during a meeting to cast votes on matters under consideration. This person may not necessarily be a member of the company. It is common for company directors to serve as proxies for shareholders unable to attend meetings, ensuring that their votes are counted according to their instructions.
Key Characteristics:
- Authorization: A proxy acts based on the authorization provided by the shareholder, often detailed on a formal proxy form.
- Meeting Participation: They participate in company or shareholder meetings and vote on resolutions.
- Instruction Specificity: Shareholders can provide clear directives on how the proxy should vote on specific issues.
Examples
Example 1: Board of Directors Meeting
A shareholder who cannot attend a company’s annual board of directors meeting appoints a proxy. The shareholder provides instructions on the proxy form to vote in favor of electing a new board member and against a proposed merger.
Example 2: Shareholder Meeting for a Merger
During a significant shareholder meeting regarding a potential merger, a shareholder unable to attend grants a general proxy to another trusted individual to vote on multiple issues as they see fit.
Frequently Asked Questions (FAQs)
What is the purpose of a proxy?
A proxy allows shareholders to participate in decision-making processes even when they cannot personally attend meetings. This ensures their vote is still counted.
How does one appoint a proxy?
A proxy is appointed through a formal mechanism provided by the company, such as a proxy form included in the meeting notice. This form must generally be submitted not less than 48 hours before the meeting.
Can anyone be my proxy?
Yes, you can appoint anyone as your proxy, including company directors or third parties, though many choose individuals familiar with corporate governance.
What is a two-way proxy form?
A two-way proxy form is a document that allows a shareholder to specify whether their proxy should vote for or against a particular resolution.
What distinguishes a special proxy from a general proxy?
A special proxy is authorized to vote at a particular specified meeting, while a general proxy can vote in any company meeting.
Related Terms
General Proxy: An authority given to an individual to vote on all matters in company meetings without specific instructions. Special Proxy: An authority limited to a single meeting or specific matter. Two-Way Proxy Form: A form allowing specification on how votes should be cast on particular resolutions.
Online References
Suggested Books for Further Studies
- “Corporate Governance” by R.A.G. Monks and N. Minow - This book provides extensive insights into the roles and responsibilities within corporate governance structures.
- “Company Law: Theory, Structure, and Operation” by B. Hannigan - A detailed exploration of the legal frameworks governing companies including the use of proxies.
- “Corporate Meetings, Minutes & Resolutions” by A. Mancuso - A practical guide that delves into the procedural aspects of corporate meetings, including proxies.
Accounting Basics: “Proxy” Fundamentals Quiz
Thank you for exploring the essential concepts of proxies in corporate governance and participating in our quiz. Happy learning!
