A Proxy Upon Your House: Things to Know to Ensure Fair Voting Procedures

Suspicious of the form of proxy used by the corporation in the past, they chose to create their own form of proxy without the benefit of legal counsel, To help ensure they would receive as many proxies as possible, they began soliciting proxy signatures almost two years before the annual meeting at which the votes were to be cast.

Unfortunately, the form of proxy they created was worded ambiguously and failed in numerous instances to clearly state the current intention of the shareholder(s) giving the proxy. As well, many of the proxies had been re-dated or otherwise altered over time in pen without shareholder initials.

Unhappy Ending

The end result was that many of the proxies were declared invalid and could not be voted — a determination that not only affected the outcome of the election but further fueled resident suspicions regarding the relationship between the holder and the incumbent board.

The meeting ended unhappily, with the proxy-holders refusing to recognize the new form and both sides threatening litigation.

In an effort to address the concerns expressed by the majority of resident shareholders and to ensure that the legitimacy of the elected would be recognized over the coming year, I successfully persuaded both the holder and the incumbent to agree to a special meeting at which only resident shareholder votes would be counted toward the election of the resident directors and a new, standardized form of proxy would be used. After all parties had ample time to campaign and collect new proxies, a new election was held.

As it turned out, the resident shareholders voted resoundingly to reelect the incumbent board, presumably in no small part as a result of the board’s willingness to fairly address the concerns of its shareholders.

Form Formalities

Regardless of what the particular issues might be, or whether you choose to use the cooperative’s form of proxy for a meeting or your own, one thing remains certain: It must be done correctly. A proxy should be worded so that the intention of the shareholder of record giving the proxy can be clearly understood or inferred.

When giving your right to vote to a third party, make certain that you have fully and properly completed your proxy so that you can clearly be identified as the shareholder of record entitled to vote, and that you have named your proxy-holder, dated the proxy, and provided any other pertinent information required by the cooperative for the meeting. If you make any pen changes to your proxy, be sure you initial them. Most importantly, if you don’t wish to give general authority to your proxy-holder to vote however he or she chooses, specify how you would like your shares voted on the proxy itself.

In that way you can direct how your vote will be cast, even though you are unable to be present at the meeting personally.

Mitchell A. Dix is the founder of the Manhattan law firm Mitchell A. Dix & Associates.

Illustration by J.D. King.

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