Investors routinely purchase shares of publicly traded corporations. These investors are considered shareholders or stockholders and their shares signify part ownership of the corporation. As a result of their ownership, shareholders are granted several powers, including the ability to elect a board of directors. They engage in these activities during annual shareholder meetings. Many sign proxy forms which allow them to vote on corporate matters without being present. The forms authorize third parties to vote on their behalf.
Procedure for Voting
According to the U.S. Securities and Exchange Commission, corporations offer shareholders four ways to cast a vote. Shareholders may attend the annual shareholder meeting in person to vote. Prior to that meeting, shareholders receive documents outlining the voting procedures, the meeting details and a proxy card. Shareholders also may vote by mail by completing the proxy card, which notes the issue to be voted on. A proxy card is distinct from a proxy form: the card is the actual ballot, and the form is an authorization for a third-party voter. Additionally, companies may allow shareholders to vote by phone or Internet.
Proxy Form Language
Although the proxy form language will vary, typical authorization forms require shareholders to identify themselves, the corporation in which they hold shares, the third-party proxy voter as the shareholder's agent, the meeting at which the proxy will vote and an acknowledgment that previous proxies are replaced. Shareholders must date and sign the form. Proxy voters are bound to cast votes according to the shareholder's instructions.
Authorizing the Proxy
After identifying a proxy voter and completing the authorization form, shareholders may transmit the document to the corporate office. Alternatively, some corporations allow proxies to present the form themselves at the relevant annual shareholder meeting. Proxies are allowed to vote once the authorization is submitted, either prior to or during the relevant shareholder meeting.
Revocation of Proxy
Generally, shareholders are not bound by previously submitted proxy forms if they wish to revoke authorization. Although the specific rules vary with each corporation, once the proxy form is signed and submitted, shareholders must follow a separate procedure to revoke the authorization. Generally, shareholders of record must transmit a letter identifying the proxy, along with a request to remove the voter's authorization. However, shareholders must authorize a new proxy if they intend to cast a vote at a meeting that they will not physically attend.
Proxy Forms and Brokers
Shareholders who purchase shares through broker-dealers do not vote directly with the corporation, and thus do not always need to sign physical proxy forms. Broker-dealers act as a proxies and cast votes on the shareholder's behalf. These shareholders may vote at the meeting by either becoming a registered owner or by requesting that the broker tender the proxy to the shareholder. Shareholders become registered owners by requesting the physical stock certificates, typically for a fee. Shareholders may cast direct votes by physically appearing at the annual shareholder meeting.
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