Last updated April 13, 2023
What is a Shareholder Proxy?
A Shareholder Proxy is a document that allows a shareholder to authorize someone else to vote on their behalf when absent from a meeting. The authorized representative is called the proxyholder.
When a proxyholder votes on a shareholder’s behalf, it’s called proxy voting. Proxy voting is common in shareholder meetings, as shareholders may be unavailable for various reasons. In Canada, proxy voting is regulated by the Canada Business Corporations Act.
A Shareholder Proxy is one of many valuable documents used in corporate governance and may also be referred to as a proxy card.
When to use a Shareholder Proxy
A Shareholder Proxy is useful when a shareholder doesn’t want to attend or cannot attend an annual or special meeting. A shareholder may be unable to attend a meeting in person due to:
- Scheduling conflicts
- Living in a different city
- Working a full-time job
- Travelling
- Sickness or injury
Voting by proxy ensures that a shareholder can still vote and influence important decisions.
Here's how a Shareholder Proxy form typically works:
- The shareholder fills out the form, indicating who they want to designate as their proxyholder and providing voting instructions.
- The shareholder signs and dates the form, proving that they’ve authorized the proxyholder to vote on their behalf.
- The shareholder provides the corporation with the form (e.g., by mail, electronically, fax, etc.), or the proxyholder brings the form to the meeting.
- The designated proxy attends the shareholder meeting and votes on behalf of the shareholder according to the instructions on the form.
When shareholders vote, their actions or decisions are recorded in Shareholder Meeting Minutes. Minutes should outline resolutions, appointments of officers, and any other actions made by the shareholders.
Providing instructions in a Shareholder Proxy
As a shareholder, you may provide voting instructions or impose limitations for your proxyholder. For example, you may outline in a Shareholder Proxy that your proxyholder must vote to elect a specific person as a board director.
Conversely, you may give a proxyholder full authority to vote at their discretion on all matters and issues.
The extent of authority that you give to your proxyholder determines which type of Shareholder Proxy you create:
- A general Shareholder Proxy gives the proxyholder the full authority to vote at their own discretion on all matters and issues.
- A general Shareholder Proxy with limitations or instructions gives the proxyholder general authority while providing some specific directions.
Shareholder Proxy forms are necessary because they facilitate proxy voting. More specifically, they’re important and beneficial for the following reasons:
1. Accessibility
Shareholder Proxy forms make voting accessible for all shareholders. This is particularly important for large companies or organizations where it may be difficult for all shareholders to attend meetings in person.
2. Representation
Shareholder Proxy forms ensure that all shareholders have a voice and are represented in corporate decision-making regardless of whether they can attend in-person meetings. In other words, proxy voting can increase participation.
3. Efficiency
Proxy voting can help to reduce the time and resources required to conduct meetings. Depending on a corporation’s size, in-person shareholder meetings can come with logistical challenges, such as scheduling a large enough venue and providing adequate seating. Proxy voting can increase efficiency and reduce these challenges.
Who can be a proxy for a shareholder?
Generally, a shareholder can appoint any other person as their proxy at a shareholder meeting. It doesn’t have to be another shareholder of the company.
A proxy should be someone the shareholder trusts to act in their best interest and carry out their voting instructions. This person could be a friend, family member, or financial advisor.
In some companies, shareholders may appoint the meeting chair as a proxy, but shareholders should carefully consider the potential conflicts of interest in such a scenario.
Some restrictions or requirements may exist on who can act as a proxy. The restrictions could be dependent on:
