{"id":9928,"date":"2023-03-04T12:04:48","date_gmt":"2023-03-04T12:04:48","guid":{"rendered":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/?p=9928"},"modified":"2024-02-15T09:12:05","modified_gmt":"2024-02-15T09:12:05","slug":"shareholder-proxy","status":"publish","type":"post","link":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/shareholder-proxy\/","title":{"rendered":"What is a shareholder proxy?"},"content":{"rendered":"

A shareholder proxy is a person who is appointed to stand in for a shareholder at a general meeting of members. Essentially, the proxy acts as a representative or substitute for the shareholder in their absence by attending a general meeting and voting on their behalf.<\/p>\n

We explore this topic in detail below, discussing the role of a proxy shareholder, the rights they are permitted to exercise, and how to appoint a proxy in a UK limited company.<\/p>\n

The role of a shareholder proxy<\/h3>\n

Pursuant to the Companies Act 2006 (section 324), every member (shareholder or guarantor) of a company has the right to appoint another person as their proxy, if they are unable to attend a general meeting of members for any reason.<\/p>\n

Upon their appointment, the proxy may exercise all or any of the absent member\u2019s rights to attend, speak, and vote on their behalf at a general meeting of the company.<\/p>\n

Proxy representation provides a means for shareholders to participate at general meetings through an intermediary of their choosing, rather than having to opt out of participation if they are unable to attend a meeting.<\/p>\n

This ensures that all shareholders\u2019 views and questions are put forth at every general meeting, and their votes are counted in any company decisions that are made during their absence.<\/p>\n What rights do shareholders of a company have?<\/span><\/a>\n \n

The right to appoint a proxy is a statutory right. Companies cannot restrict or revoke the proxy rights set out in the Model articles<\/a>, but they may provide enhanced proxy rights in bespoke articles of association or a shareholders\u2019 agreement.<\/p>\n

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As such, every notice calling a general meeting must include a statement informing members of their right to appoint a proxy under section 324 of the Companies Act, in addition to any other proxy rights set out in the articles or shareholders\u2019 agreement. Failure to include this information is an offence.<\/p>\n

Members with multiple shareholdings<\/h4>\n

In the case of a company limited by shares, section 324(2) of the Companies Act<\/a> provides that shareholders may appoint more than one proxy in relation to a general meeting, on the condition that \u201ceach proxy is appointed to exercise the rights attached to a different share or shares held by him, or (as the case may be) to a different \u00a310, or multiple of \u00a310, of stock held by him.\u201d<\/p>\n

Understanding limited company shares<\/span><\/a>\n Why do companies use multiple share classes?<\/span><\/a>\n <\/p>\n

This means that any member who holds more than one class of share (e.g. ordinary shares and preference shares) can appoint a different proxy for each share class. For example, if the shareholder has one ordinary share and one preference share, they can appoint two proxies, each of whom will have one vote at the meeting.<\/p>\n

Joint shareholdings<\/h4>\n

Where shares are jointly owned by more than one member, only the first named shareholder has the right to appoint a proxy. The subsequently named shareholder(s) does not have this right.<\/p>\n

Similarly, only the first named member has the right to vote at general meetings and sign written members\u2019 resolutions. The purpose of such restrictions on joint shareholdings is to minimise a company\u2019s administrative burden.<\/p>\n

Corporate shareholders<\/h4>\n

Corporate shareholders (i.e. companies holding shares in other companies) have the same proxy rights as those afforded to individual shareholders.<\/p>\n

However, a corporate shareholder will generally appoint a \u2018corporate representative’ of the company to attend meetings on its behalf.<\/p>\n

The representative has the same powers as a proxy, but there is no requirement for the corporate shareholder to submit a proxy form in advance of the meeting.<\/p>\n\t\t

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To appoint a representative, the corporate shareholder simply passes a board resolution and provides a certified copy of the relevant board meeting minutes (or written board resolution) to the representative, which they present at the general meeting.<\/p>\n

The minutes serve as proof of their appointment and authority to represent the interests of the corporate shareholder.<\/p>\n

What rights do proxies have?<\/h3>\n

Upon their appointment, the proxy has the same rights as the shareholder they are substituting, including:<\/p>\n