Grant of proxy: Overview, definition, and example
What is a grant of proxy?
A grant of proxy refers to the act of giving someone else the authority to act on your behalf, typically in matters related to voting or decision-making. In business and legal contexts, it often occurs when a shareholder of a company grants a proxy to another person to vote on their behalf at a shareholder meeting or corporate event. The person receiving the proxy is called the "proxy holder."
For example, if a shareholder cannot attend an annual general meeting, they might grant a proxy to another shareholder or an agent to vote according to their instructions.
Why is a grant of proxy important?
A grant of proxy is important because it allows individuals to participate in decisions or meetings even if they are unable to attend in person. It ensures that a shareholder or other party’s voice is still heard, and their voting power is exercised. In corporate governance, it helps facilitate smooth decision-making, particularly in large organizations with many stakeholders who may not be able to attend every meeting.
Additionally, granting a proxy ensures that decisions can still be made without requiring the physical presence of all involved parties, which is especially helpful for long-distance shareholders or stakeholders in various time zones.
Understanding the grant of proxy through an example
Imagine a shareholder, Sarah, owns shares in a company but cannot attend the company's annual meeting. Sarah may grant a proxy to her colleague, John, to vote on her behalf. In the proxy form, Sarah will specify how John should vote on various issues (such as electing board members or approving financial statements). John, acting as Sarah’s proxy holder, will cast the votes as instructed.
In another case, a shareholder may give a proxy to a corporate officer to vote on important company decisions. This ensures that the shareholder’s voting rights are still exercised even though they may not be present to vote in person.
An example of a grant of proxy clause
Here’s how a clause granting a proxy might appear in a contract:
“The Shareholder hereby grants a proxy to [Insert Name], with full power of substitution, to vote on their behalf at the Annual General Meeting of the Company, including on all matters brought before the meeting.”
Conclusion
The grant of proxy is an important tool that allows individuals to delegate their voting or decision-making authority to another person. It ensures participation in meetings or votes, even when someone cannot attend in person. In business, this practice helps ensure that decisions can be made efficiently and that all stakeholders are represented. By carefully drafting a grant of proxy, the delegating party can ensure that their interests are properly represented.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.