Legal Definitions - proxy

The term proxy refers to two related concepts, primarily within corporate governance:

• First, a proxy can be a person who is officially authorized to act or vote on behalf of another individual, especially a shareholder in a company. This person is given the legal authority to attend meetings, participate in discussions, and cast votes just as the original shareholder would, even if the meeting is held remotely.

• Second, a proxy (often referred to as a proxy statement) is a formal legal document that a company sends to its shareholders before a meeting where votes will be cast. This statement provides crucial information about the issues to be voted on, such as the election of directors, proposed mergers, or other significant corporate actions. It also includes instructions on how shareholders can cast their votes, either in person, by mail, or by designating a proxy (person) to vote on their behalf.

Here are some examples illustrating the use of the term:

• Imagine a shareholder named Ms. Chen who owns a significant number of shares in "Global Innovations Inc." She is scheduled for a critical surgery on the day of the company's annual shareholder meeting and cannot attend. To ensure her voice is still heard, Ms. Chen formally designates her trusted legal assistant, Mr. Davies, to attend the meeting and vote her shares according to her specific instructions. In this scenario, Mr. Davies acts as Ms. Chen's proxy, exercising her voting rights on her behalf.

• Consider "Eco-Solutions Corp.," a publicly traded company preparing for its annual general meeting. Before the meeting, the company is legally required to send a comprehensive document to all its shareholders. This document details the candidates nominated for the board of directors, explains a proposed change to the company's bylaws, and outlines a plan for a new environmental initiative that requires shareholder approval. It also provides a ballot and instructions for shareholders to cast their votes. This official communication from Eco-Solutions Corp. to its shareholders is known as a proxy statement.