Proxies and Proxy Voting at Membership Meetings
Our attorneys get lots of questions about proxies and proxy voting. And that’s understandable, as proxy issues at meetings can get very confusing.
A proxy is similar to a power of attorney as could be used to open a bank account or sell a car for another person. If proxies are permitted at a meeting, the proxy can likely be given to any person or entity. That’s because the person carrying the proxy isn’t really who is at the meeting–the proxy giver is. FYI, most parliamentary books like Robert’s Rules of Order Newly Revised (11th Edition) REALLY don’t like proxy voting:
Proxy voting is not permitted in ordinary deliberative assemblies unless the laws of the state in which the society is incorporated require it, or the charter or bylaws of the organization provide for it. Ordinarily, it should neither be allowed nor required, because proxy voting is incompatible with the essential characteristics of a deliberative assembly in which membership is individual, personal, and nontransferable. RONR, p. 428
If proxies are permitted because of state statute or the governing documents, there are five generally recognized types of proxies (as noted on p. 80 of my book, The Complete Idiot’s Guide to Parliamentary Procedure Fast-Track):
- General proxy: The holder of the proxy has discretion to do whatever he or she wishes at the meeting and can speak, make motions, second motions, and vote on all issues
- Limited proxy: The holder of the proxy can only vote on certain issues at the meeting
- Directed proxy: The holder of the proxy can only vote as directed
- Limited directed proxy: The holder of the proxy can only vote on certain issues as directed
- Quorum proxy: The proxy only counts for purposes of obtaining a quorum and nothing else
Without question, the simplest and least-likely-to-cause-trouble approach is the General Proxy (you go to the meeting on my behalf and do what I could do). As the proxy becomes more complicated, the possibilities for dispute rise. For instance, if I give you a Directed Proxy to go to the meeting and “vote against the $10 assessment increase,” what happens when everyone at the meeting agrees to a $5 increase? Can you vote? Must you vote against the $5 increases simply because you were instructed to vote “no”? Most proxy problems arise because of Limited or Directed aspects that can’t take into account that meetings are fluid.
For HOAs, condos and nonprofit corporations, many states now have statutes with mandatory requirements for a proxy, such as being signed, dated, and a proxy holder name given, and most provide for a default period of time that the proxy is good. A few states (and even the model HOA/condo acts) go further and have very specific requirements on whether proxies are allowed and their form (can the holder speak, make motions, and vote OR only vote; must proxies be directed; to whom can proxies be given; is there a limit on total proxies; is there a limit to how many proxies can be carried by a single individual, etc.). In some states the statutory requirements override everything else, and elsewhere the law fill in the gaps if the association’s documents say little about proxies. Often the statutes allow bylaws to put further restrictions on proxies, such as whether they can be general or must be directed.
In North Carolina there is one statute governing proxies in planned communities created on or after January 1, 1999, and a different statute that applies to planned communities that are nonprofit corporations created prior to January 1, 1999. Similarly, one statute governs proxies in condominiums created on or after October 1, 1986, and a different statute applies to condominiums that are nonprofit corporations created prior to October 1, 1986.
A proxy can typically only be used by the person named and is of no use if that person misses the meeting. However, if written properly, a proxy can sometimes include authority for the proxy holder to name someone else as proxy to attend the meeting. Such a “power of substitution” has pros and cons that should be considered when drafting the document.
Another issue that can arise is whether proxies must be given to an individual or can they can go to a group, such as “the board.” Such questions have to be resolved by looking at state laws and the governing documents. But there are also administrative issues with “group” proxies, such as who is authorized to cast the proxy? For instance, what if a proxy is given to a board and nothing shows that the board voted at a meeting with a quorum present to determine what to do with the proxy (the board just loosely handed them out to different board members)? With such facts, there is an argument there is no basis for the proxy being cast.
Proxies and Proxy Voting at Board Meetings
Unlike membership meetings, the general rule is that proxy voting is not permitted at board meetings (although that could vary by type of organization and specific state statutes). The principle for requiring attendance at board meetings is that board members are elected as fiduciaries and have obligations that cannot be easily transferred to others. If board attendance is a problem, most state laws governing HOAs/condos and nonprofits allow participation in board meetings by telephone (or other form of communication) so long as all directors can hear each other during the meeting (i.e., speaker phone or telephone conference). If permitted, directors participating in such a manner are considered present in person at the meeting. Newer statutes get even more precise about board member voting.
As can be seen, specific answers can vary significantly by state and specific association, so it’s always best to seek legal advice on any proxy questions. Feel free to contact an attorney at Law Firm Carolinas if we can be of help.
If you’re interested in learning more about voting and proxies, you may wish to take a look at either of my books on meeting procedure, The Complete Idiot’s Guide to Parliamentary Procedure Fast-Track or Notes and Comments on Robert’s Rules, Fourth Edition. There are also many free charts and articles on Robert’s and meeting procedure at our firm’s parliamentary procedure Website, www.jimslaughter.com. All of the information on the Website is free, so feel free to use or share.