Page 34 - The Law of Difficult Meetings

The Law of Difficult Meetings

25.2 The instrument of proxy

It is common for the instrument of proxy to contain express wording as to the proxy’s discretion. For listed
companies, the instrument of proxy must state that if it is returned without an indication as to how the proxy
shall vote on any particular matter, the proxy will exercise his discretion as to whether he votes and if so, how.
Sometimes, the proxy form includes wording which goes further and makes it clear that, in the absence of specific
instructions, the proxy will vote or abstain from voting at his discretion on any business – whether a matter
included on the proxy form on which no indication is given, an amendment to a resolution, a resolution to adjourn
or any other business – which may properly come before the meeting. Such a statement should cover broadly the
following:

“Subject to any voting instructions given, your proxy will exercise his/her discretion as to how he/she votes
and whether or not he/she abstains from voting on any resolution, by whomsoever proposed (including,
without limitation, any resolution to amend a resolution or to adjourn the meeting).”

Is there an advantage in including some general discretionary wording of this type in the instrument of proxy? It
certainly has the advantage of making the proxy’s powers clear to the shareholder and to the proxy. It may also
make the proxy’s position slightly stronger in a case where there is no indication of the member’s wishes: the proxy
is expressly authorised to vote or abstain from voting at his discretion on other matters. Particularly where the
Chairman of the meeting is appointed as proxy by many members, it may well be advantageous to ensure that he
is clearly given the widest possible powers to vote at his discretion. It is far better, wherever possible, to incorporate
specific instructions (particularly in relation to questions of amendment or adjournment) into the proxy form so
as to avoid subsequent disputes between the shareholder and the proxy as to whether the proxy had a residual
discretion and had exercised it properly.

Even if express general wording of the kind recommended above is included in the proxy form, a proxy should
consider what the appointor, if asked, would wish to be done in deciding, for example, how to vote on a resolution
to adjourn a meeting. The appointor who wanted the resolution to be passed may not want the meeting to
be adjourned while the appointor who opposed the resolution may be happy for the meeting to be adjourned.
Accordingly, the “yes” and discretionary proxy votes given to the Chairman should be used by the Chairman to vote
against an adjournment motion, while the “no” proxy votes should be used to vote for an adjournment. Articles of
association may expressly state that the instrument of proxy shall be deemed to confer authority to vote on any
amendment of a resolution put to the meeting. Such a provision gives the proxy an absolute discretion to vote on
an amendment in the absence of any indication of the member’s wishes. In every case, however, it is important to
go back to the basic agency principles, so that the proxy should vote in accordance with what he can ascertain to
be the wishes of his appointor.

In April 2012, the ICSA Registrars Group published a guidance note on practical issues around voting at general
meetings which noted that it is best practice for issuers with shares in CREST to allow for appointments and
instructions via the CREST Proxy Voting Service and, where this facility is offered, for shareholders who hold shares
in CREST to vote via that service. The note also states that it is best practice to allow shareholders to appoint and
instruct via the internet. Additionally, the note highlights that a number of shareholders are using multiple media

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