Proxy for Public Company
Directors of public companies play a crucial role in ensuring that a
company and its management team serve the interests of its
shareholders. Proxy voting can help ensure accountability of
management teams and boards of directors, align management and
shareholder interests, and monitor and assess the degree of
transparency and disclosure with respect to executive compensation and
board actions affecting shareholders’ rights.
The following general guidelines are intended to reflect these proxy
voting principles:
Under the 1973 Companies Act, a company was entitled to require a
proxy to be lodged on or before a particular time, in order for that proxy
to be valid. The rationale for this provision was to give sufficient time to
enable the officer presiding at a meeting to verify and validate the proxy,
before allowing that proxy to vote.
It is common practice for a company to include a provision in its
memorandum of incorporation which requires that a proxy form be
lodged at least 24 hours prior to a meeting.
Reliance on this provision has meant that a shareholder who is
unexpectedly prevented from attending a shareholders meeting through
forces beyond its control, is unable to submit a proxy form on the day of
meeting, resulting in that shareholder not being entitled to vote at
such meeting.
The wording of the Companies Act, 2008 (“the Act”) has changed, and
the shareholders of a company is entitled at any time to appoint any
individual as a proxy to participate in and speak and vote at a
shareholders meeting on behalf of that shareholder.
The Practical Implications
Upon a proper interpretation of the judgment, and the relevant provisions
of the Act, the provisions of a company’s MOI which purport to impose a
time constraint for the delivery of a proxy form, will be invalid, only to the
extent that such provision/s are inconsistent with their shareholders’ right
to appoint a proxy at any time before a meeting as provided for the in the
Act.
The proxy forms themselves will remain valid and shareholders making
use of such forms will not be excluded from any meetings.
The court did recognise the practical difficulties that may arise as a
result of this interpretation of s 58, including the administrative burden
imposed on the presiding officer of a general meeting to validate and
verify proxies prior to allowing a proxy to exercise a vote. The court
noted that such practical difficulties need to be resolved through
legislative intervention and not through a strained interpretation of the
Act.
The ultimate effect of this judgment, therefore, is that shareholders may
submit a proxy form “at any time” and the company is not entitled to
place any time constraint on such right. Any attempt to enforce such a
time constraint will not withstand challenge.
No legislative intervention has been forthcoming to date, and any
company which has an MOI which requires a proxy form to be delivered
at a specified time prior to a meeting, should consider an amendment to
that MOI, and at the very least, should not attempt to enforce such time
limitation.
Appointing a proxy
A member of a company is entitled to appoint another person as his
proxy to exercise all or any of his rights to attend, speak and vote at a
meeting of the company.
In every notice calling a meeting of a company, there must appear, with
reasonable emphasis, a statement informing the member of his rights
under the Companies Act) to appoint a proxy, and any more extensive
rights conferred by the articles to appoint more than one proxy.
A member can appoint any other person to act as his proxy; it does not
have to be another shareholder of the company. In practice, where the
voting at a general meeting is to be held on a poll rather than a show of
hands, many shareholders opt to appoint the chairman of the meeting to
be their proxy. They usually set out voting instructions within the proxy
form, which the chairman is obliged to follow.
A member of a company is entitled to appoint more than one proxy to
exercise all or any of his rights to attend and to speak and vote at a
meeting of the company, provided that each proxy is appointed to
exercise the rights attached to a different share or shares held by the
member. This right cannot be excluded or reduced by a company’s
articles of association.
The Companies Act does not specify any particular way in which the
members of a non-traded company should appoint a proxy. However,
the company's articles of association will usually contain more detail on
the appointment of a proxy and should be reviewed prior to doing so.
The Companies Act also does not specify any time by which a proxy
notice must be received. However, in practice, companies tend to set a
deadline for delivery of proxy notices in their articles of association.
A member may terminate his proxy's authority to attend, vote and speak
at a general meeting at any given point.
Voting By Proxy
In order to pass a shareholder resolution at a general meeting (including
an AGM), the members of a company will have to vote on the resolution
either on a show of hands, or on a poll.
A proxy must vote in accordance with any voting instructions given by
the member by whom the proxy is appointed.
Subject to the provisions of a company's memorandum of incorporation,
on a vote on a resolution on a show of hands at a meeting, every proxy
present who has been duly appointed by one or more members entitled
to vote on the resolution has one vote, and a proxy has one vote for and
one vote against the resolution if:
• the proxy has been duly appointed by more than one member
entitled to vote on the resolution, and
• the proxy has been instructed by one or more of those members to
vote for the resolution and by one or more other of those members
to vote against it.
Many companies now generally use poll voting rather than voting on a
show of hands. On a poll, all or any of the voting rights of a member may
be exercised by one or more duly appointed proxies, but where more
than one proxy is appointed, those proxies are not authorised to
exercise more extensive voting rights than could have been exercised by
the member in person. This reflects the fact that multiple proxies can
only be appointed and exercise rights in respect of different shares.
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