PROXIES

QUESTION: Our board wants to send out proxies and ballots. Aren't they the same? Why send both?

ANSWER: Proxies and ballots are not the same. A ballot records a person's vote and is counted by the Inspector of Elections. A proxy is a signed authorization for someone to attend a meeting and vote on your behalf. Corp. Code §7613(a) Proxies may not be used in place of ballots. Civil Code §1363.03(d)(2) At the meeting, your proxyholder (members only) will be issued a ballot so he/she can vote on your behalf. Boards are not required to send out proxies--only ballots are required. Proxies must be in the proper format to be valid.

Potential Fraud. Along with the broad definition of signatures, two-page proxies create the potential for election fraud. Since there is no way to verify that proxyholders actually vote their ballots according to proxygiver's instructions, the proxyholder can change an owner's vote. As a result, we can expect election challenges and litigation over the use of proxies.

RECOMMENDATION. Under the new election laws, proxies have become problematic. The solution is to amend your bylaws to eliminate quorum requirements for the election of directors. This allows elections to be conducted entirely through the mail and dispenses with the need for proxies. If you wish to simplify your elections, contact us about amending your bylaws.

Updated 7/28/2008