The Definition of Proxy Ballot

Proxy

• A proxy is a written document created by a corporate shareholder, which then empowers another individual to vote that shareholder's shares. A proxy must be made in writing, although modern law generally accepts fax or email as well. The written document, also known as an appointment form, must be signed by the shareholder or his legal representative and then sent to the corporate secretary. Once created, a proxy only lasts for eleven months, unless the language of the proxy itself mandates otherwise.
  
  

Disclosure Requirement

• Under the Securities Exchange Act, a valid proxy must include full disclosure of all important information regarding upcoming shareholder votes on proposals submitted by management. This requirement intends to combat attempts by interested parties to influence the way a proxy votes by withholding information on the issues. The Act forbids anyone from soliciting a proxy using material misstatements, omissions or fraud.
  
  

Proxy Balloting

• A proxy ballot is the actual vote cast by the proxy. A shareholder may wish to employ a proxy to cast their vote for two reasons. The easy scenario occurs when the shareholder may not be able to attend the shareholder meeting and simply wishes to use the proxy as a substitute to cast his vote. However, sometimes factions emerge during the voting process. In this case, a shareholder may designate another party as a proxy in order to signify that shareholder's willingness to support that party's position on the upcoming vote. Should one party amass enough proxies, he becomes a strong force in the vote.
  
  

Death of Shareholder

• If the shareholder who appointed the proxy should die or become incapacitated while the proxy is in effect, the corporation can still accept the proxy designation and the proxy can still vote. However, should the corporation receive written notice that the shareholder has died or become incapacitated before the proxy votes, the corporation may then refuse to accept the proxy's vote.
  
  

Revocability

• A shareholder can usually revoke a proxy designation by submitting written notice to the corporation. Proxies are only irrevocable is the proxy appointment form explicitly states that the proxy is irrevocable, and the proxy appointment includes a transfer of interest. Transfer of interest means that, in addition to the proxy designation, some sort of related transaction took place. For instance, if another entity extends credit to the corporation but conditions that credit upon appointment of the proxy or if the employment contract for a corporate employee requires a proxy appointment.