Meaning

”Proxy” means an instrument in writing signed by a Member, authorizing another person, whether a Member or not, to attend and vote on his behalf at a Meeting and also where the context so requires, the person so appointed by a Member.

Black’s Law Dictionary [9th Edition, Page 1346] defines the term “proxy” as

“1.One who is authorized to act as a substitute for another; esp., in corporate law, a person who is authorized to vote another’s stock shares.

2. The grant of authority by which a person is so authorized.

3. The document granting this authority.”

Proxy Applicable Provisions: Section 105 of Companies Act, 2013 Rule 19 of Companies (Management and Administration) Rules, 2014 defined “A person who can attend and vote in general meeting on behalf of the member of the company”.

Appointment:

CG may notify the class or classes of company /companies that shall not have right to appoint Form MGT 11 to be filed by the member. Further, it needs to be in writing and signed by the member and any other format is not admissible. Form shall be deposited within 48 hours or it may require any longer period prescribed in Article before commencement of the meeting at Registered Office. A person can become proxy for maximum 50 members and their holding is in aggregate of 10% of Share Capital carrying voting rights. In case of Section 8 company, only the member of such section 8 company is entitled to become proxy for another member. Company, at its own expense cannot invite to its member for appointing proxy. If invited, fine up to Rs. 50,000 will be imposed to every officers of the company who issues the invitation. Provided the officer is not liable by reason if proxy form and list of persons provided who are willing to appointed as proxy on the direction of members.

Benefits of Proxy

Management ensures that ownership interests are fully represented by encouraging shareholders that are unable to attend annual meetings to vote by proxy. Before the annual meeting, each shareholder is issued a proxy card, allowing them to state their votes in writing or designate a third party to vote on their behalf. proxy voting allows shareholders to vote on the composition of the company’s board, the compensation of its officers, and the company’s accounting firm. It also allows voting on shareholder proposals. During corporate elections, the board of elections will recommend their preferred candidates or choices, but the final decision is up to each voter.

Proxy Statements

Before the annual shareholder meeting, all shareholders receive a packet of information containing the proxy Statement. The proxy documents provide shareholders with the information necessary to make informed votes on issues important to the company’s performance. A Proxy statement offers shareholders and prospective investors insight into a company’s  governance and management operations

Rights of the proxy:

1. Attending meeting.

2. Voting on poll.

Disabilities of proxy:

A person appointed as proxy shall not have the right to give views on the agenda for which meeting is conducted at the meeting. A proxy cannot vote on a show of hands. A proxy is not counted for the purpose of quorum He cannot vote by show of hands Disclosure in Notice of GM: In every notice of general meeting the company shall state that a member who is entitled to attend and vote can appoint proxy on his behalf and that proxy need not to be a member (except in the case of Section 8 company). If there is any default made in compliance with this provision, penalty of Rs.5000 will be imposed.

Inspection:

Any member is entitled to inspect proxy forms within 24 hours prior to the general meeting to the conclusion of such general meeting. Notice for inspection required to be given by the member at least 3 days before the commencement of meeting. Additional Points: If member attends the meeting, after appointment of proxy, the rights of proxy shall be revoked.

Conclusion:

A proxy is an agent legally authorized to act on behalf of another party or a format that allows an investor to vote without being physically present at the meeting. Shareholders not attending a company’s  annul general meeting (AGM) may vote their shares by proxy by allowing someone else to cast votes on their behalf, or they may vote by mail. Management ensures ownership interests are fully represented by encouraging shareholders who are unable to attend annual meetings to vote by proxy. Proxy’s appointment is valid for both, the original and the adjourned GM, and he should carry a valid identity proof while attending such GMs. A proxy’s authority can be revoked in writing anytime before the GM. In case a member who had appointed a proxy also attends the GM, the proxy’s authority automatically stands revoked.