Thursday, October 6, 2011

Shareholders Voting by Proxy

Oh How Things Have Changed – Shareholders Voting by Proxy

Today we are entirely accustomed to shareholders, especially in publically traded corporations, voting by proxy.  This right to vote by proxy is incorporated in the various business corporation statutes.  See, e.g.,  Del. Code Ann. tit. 8, § 212; Ind. Code § 23-1-30-3(a) (“A shareholder may vote the shareholder’s shares in person or by proxy.”); Ky. Rev. Stat. Ann. § 271B.7-220.  What is often unrecognized is that permitting shareholders to vote by proxy was an innovation accomplished by state legislatures changing the common law.  Under the prior common law, shareholders could not vote by proxy.

  • II Arthur W. Machen, Jr., A Treatise on the Modern Law of Corporations (1908) § 1252 (“At common law each member of a corporation could vote in person only, and could not give a proxy or power of attorney for that purpose.”)

  •  Charles B. Elliott, A Treatise on the Law of Private Corporations § 472 (3rd ed. 1900) (“At common law all votes must be given in person.  There is no right to vote by proxy unless it is conferred by statute, charter or by-law.”) (citations omitted)

  •  II William W. Cook, A Treatise on the Law of Corporations Having a Capital Stock § 610 (4th ed. 1898) (“At common law a stockholder has no right to cast his vote by proxy.”) (citation omitted).

  •  Victor Morawetz, A Treatise on the Law of Private Corporations Other than Charitable § 360 (1882) (there is no right of a shareholder to vote by proxy unless authorized by the by-laws)

  • James Grant, A Practical Treatise on the Law of Corporations In General as well Aggregate as Sole [*256] n. (q) (1854) (“In general the personal presence of the voter is necessary; and it seems that a corporation not authorized so to do by charter or statute, could not establish a mode of voting by proxy.”) (citation omitted)

  • Commissioners’ Note to Section 28 of the Uniform Business Corporation Act (1928) (“At common law, voting could be done only in person and not by proxy.”)

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