Here we set out the main things to consider when preparing a form of proxy before a members’ meeting such as an AGM and provides a free downloadable form of proxy template.
What is a proxy?
When a shareholder, for whatever reason, is unable to attend a shareholder meeting they can appoint another person (‘the proxy’) to attend and vote on their behalf. This concept is simple enough, but it is sensible to be aware of how it is applied in practice when proxies are to attend an AGM in the place of members.
A form of proxy is the document (usually provided by the company) whereby the shareholder authorises the proxy to act on their behalf.
A proxy should not be confused with an alternate; a director cannot appoint a proxy to attend and vote at a board meeting. If a director cannot attend a board meeting, they might appoint an alternate to attend in their place. For more on this please see our article on alternate directors.
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Does a proxy have the same rights and powers as the member they are substituting?
Once appointed, the proxy will possess the same rights as the shareholder to attend, speak and vote at the scheduled company meeting. Any vote by the proxy will count as if the vote had been cast by the shareholder named in the register of members.
This applies equally to shareholders in companies that only have a single shareholder as well as where there are multiple shareholders. A proxy can vote on a show of hands and on a poll. They have the right to speak at a meeting and to participate in demanding a poll.
Any vote by the proxy will count as if the vote had been cast by the shareholder named in the register of members.
Does a shareholder have the right to appoint a proxy?
The right of a shareholder to appoint a proxy is a statutory right set out in s. 324 of the Companies Act 2006. Any attempt in the articles of association to fetter or diminish this right of a shareholder (whether an individual or corporate shareholder) will be void. In practice, most companies’ articles of association actually enhance the ease and ability for a shareholder to validly appoint a proxy.
Every notice calling a general meeting must clearly inform the member of their rights under s. 324 of the Companies Act 2006 and any other rights relating to proxies in the articles of association. Failure to include this section is an offence.
In the special case of joint shareholdings, the first named holder has the right to appoint a proxy whereas the others do not. Likewise, only the first named may vote at company meetings and sign written resolutions. This is intended to ease the administrative burden on companies.
Every notice calling a general meeting must clearly inform the member of their rights under s. 324 of the Companies Act 2006 and any other rights relating to proxies in the articles of association.
When might a proxy be appointed?
A proxy would be appointed when a company is about to hold a general meeting, i.e. one attended by shareholders. The annual general meeting (‘AGM’) is the main and often only general meeting that a shareholder would attend. It follows from this that most forms of proxy relate to AGMs.
A shareholder meeting which is not the AGM is usually called an extraordinary general meeting (‘EGM’), although the Companies Act 2006 does not mention this term (the 1985 Act does) and ‘general meeting’ is commonly used.
We have written separately about how and when to call an AGM.
Very often there may just be one decision at an EGM/general meeting which requires a members’ vote. A form of proxy can be prepared to go to the shareholders together with the notice calling the EGM. The notice will advise whether the vote needs to be a simple majority (i.e. more than 50% of the votes cast) or at least 75% of the votes cast, as required for a special resolution.
The annual general meeting (‘AGM’) is the main and often only general meeting that a shareholder would attend. It follows from this that most forms of proxy relate to AGMs.
Who can be appointed as a proxy?
A proxy need not be a member of the company. When preparing a form of proxy most companies will offer the ‘chairman of the meeting’ as a default proxy. This means a shareholder can choose to either nominate the chairman or name a specific person.
A proxy can be elected to chair the meeting by a resolution passed at the meeting. This is subject to the articles’ provisions on who may or may not be chairman.
In cases where a company issues invitations to appoint a specified person as proxy e.g. the chairman, this invitation to appoint this person must be made available to all members entitled to vote at the meeting. Failure to do so is an offence.
Proxy or representative?
Corporate shareholders can appoint a proxy in the same way that an individual shareholder can. However, corporate shareholders often prefer to appoint a representative (of the company) to attend on their behalf. Like a proxy, a representative has the power to speak and demand a poll as well as vote. The reason corporate shareholders usually appoint a representative rather than a proxy is that the representative merely needs to turn up at the meeting with proof of their appointment, whereas appointing a proxy would require the corporate shareholder to lodge the form of proxy at the company’s registered office, usually 48 hours in advance of the meeting.
How to prepare the form of proxy for use at an AGM
An appointment of a proxy must be in writing. We have provided a draft form of proxy. You will need to add any additional resolutions requiring a vote and/or remove any redundant ones.
Make sure you correctly categorise each resolution as special or ordinary. Ordinary AGM business is things like receiving the accounts, approving dividends and appointing or reappointing directors and auditors. Special business is anything besides this. Note that at any general meeting other than the AGM, what would be ordinary business at the AGM becomes special business.
Most companies provide a form of proxy with the notice of the general meeting. It must be lodged at the company’s registered office, not less than 48 hours before the meeting. The 48 hours are calculated taking into account only working days.
Forms of proxy can be submitted electronically to an email address supplied by the company for that purpose. When it issues such an address it is deemed to have consented to the electronic receipt of documents relating to the appointment of proxies. It is not sufficient to submit proxy forms to an email address other than the one expressly issued by the company for this purpose.
Forms of proxy can be submitted electronically to an email address supplied by the company for that purpose.
How will the proxy vote?
A shareholder may specify that their proxy has full discretion as to how they vote, or the proxy can be appointed with specific instructions on how to vote on particular resolutions. A form of proxy may allow the proxy to vote or abstain on business which comes before the meeting which was not included in the notice calling the meeting e.g. amendments and formal motions.
Can a form of proxy be revoked once delivered to the company?
If the shareholder wants to terminate the appointment of their proxy the termination is only effective if notice of termination is received by the company (or other person specified in the company’s articles) before the start of the meeting or adjourned meeting.
Members can attend and vote in person even if they have completed a proxy form and attendance will automatically revoke the appointment of a proxy.
Accordingly a check should be made at the start of a meeting to discard any proxies received from those attending. Clearly in no case should both the member and their appointed proxy vote on the same resolution.
Can a shareholder appoint more than one proxy?
Companies Act 2006 (324) provides that a shareholder can appoint more than one proxy in relation to the same meeting, provided that each proxy is appointed to exercise the rights attached to a different set of shares, often a different share class.
In companies without a share capital, i.e. companies limited by guarantee, a member may appoint only one proxy.
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