A Proxy is NOT a Ballot

An annual meeting is called and there will be a contested election. At the meeting, the inspectors of election collect the ballots, count them, then re-count them. Finally, the winners are announced. Simple. Except, as we go through this annual meeting season, it’s apparent that a lot of people believe that a proxy, and in particular a directed proxy, can be used in place of a ballot in order to vote for co-op directors or condo managers. But this is not the case – a proxy is not a ballot and may not properly be treated as one.

Let’s step back. When a board sends a notice of annual meeting, it is often accompanied by a proxy. The proxy designates an individual board member, or the managing agent, or sometimes even “the board” as the proxy holder. If “undirected,” the proxy allows the proxy holder to vote the interest of the apartment owner as the holder sees fit. If “directed,” the proxy lists the names of the candidates, and the one submitting the proxy will be asked to check the names of those people she wishes the proxy holder to vote for on her behalf. Sometimes the one submitting the proxy checks names; sometimes not. If not, the proxy likely contains language that gives the proxy holder the same discretion she would have if it were an undirected proxy, i.e., to vote as the holder sees fit.

Now it’s true that most proxies are used solely for the purpose of reaching the required quorum. If the election is not contested, there is no vote and candidates are elected by acclimation. But when there is a contest, the proxies cannot merely be delivered to the inspectors of election to enter into their spreadsheet. The proxies do not cast a vote; they merely authorize the proxy holder to vote in place of the person who signs the proxy. And the proxy says this: “I hereby constitute and appoint X, as attorney and agent, to vote as my proxy.” So that, once at the meeting, the proxy holder must submit a ballot with the proxies attached and direct the votes according to the proxy (if there are directions) or as the proxy holder deems fit if so permitted by the proxy. And all of this is perfectly consistent with by-laws, which almost always require that elections shall be by “written ballot."

Failure to submit a ballot can have serious consequences. In one very close election, a proxy holder (a lawyer, no less) failed to submit a ballot for the proxy he held. As a result, the apartment owner’s vote could not be counted. That failure – even after the attorney running the meeting expressly announced that all proxy holders must submit a ballot – contributed to a change in the make-up of the board. In another election, where the tally was nowhere near close, a board member had to be reminded to submit a ballot so that the proxies of nearly 40% of the building could properly be counted.

Yes, it may seem like this is all form over substance – the proxy should be evidence of the apartment owner’s intention. And it is. Even so, it’s important to remember that a proxy is not a ballot, and a vote will not take place until the ballot is submitted.

Dale Degenshein is a special counsel at Stroock & Stroock & Lavan.