Explain Legal Proxy
An agent is a person appointed by another person to represent that person at a meeting or before a public body. It also refers to written authorization that allows a person to act on behalf of another person. These regulations have made it easier for shareholder groups to challenge management control, even though in widely distributed companies the costs are extremely high. If a contest takes place, reasonable costs of appeals may be legally charged to the Company by successful or unsuccessful management groups or by successful dissenting shareholder groups. However, the cost of an unsuccessful splinter group falls on its backers. Uncertainty as to the outcome of these contests is heightened because a proxy is generally revocable until it is actually voted on at the meeting. If a shareholder gives more than one proxy, as is often the case, only the most recent proxy counts. Proxies must disclose the Corporation`s voting process, nominees for the Board of Directors and compensation of directors and officers. The proxy circular must disclose the compensation of officers and directors, including salaries, bonuses, stock allocations and any deferred compensation.
The power of attorney can also provide information about other benefits used by executives, such as the use of a company`s aircraft, travel expenses, and other material costs covered by the company. While a proxy circular is particularly relevant to shareholders preparing for a company`s special or annual meeting, it can help potential investors assess the qualifications and compensation of the management team and board of directors. Finding that the leaders of an underperforming company receive significantly higher compensation than its competitors can set off a red flag of overspending and weigh on an investor`s decision to make an investment. In addition, frequent and material transactions between related parties between the Company and its officers or directors may pose a risk of misuse of the Corporation`s resources and warrant further investigation. While proxy voting is often an option, management encourages shareholders to vote in person. If the shareholder is unable to participate, proxy voting is another option. In order for a person to act as an agent for a person, it may be necessary to provide official documentation describing the extent to which the officer can speak on behalf of the person. An official power of attorney may be required to grant approvals necessary for the completion of certain actions.
The shareholder signs a proxy and authorizes the nominee to vote on behalf of the nominee shareholder at the annual general meeting. The lack of absentee shareholder protection led to the enactment of provisions in the Securities Exchange Act of 1934 authorizing the Securities and Exchange Commission (SEC) to enact rules governing the application of proxies. These rules and subsequent amendments apply to the powers of attorney of corporations whose shares are traded on a stock exchange and to all other corporations with total assets of $10 million or more and 2,000 or more shareholders. They require that applications for authorization be accompanied by statements informing the shareholder of the measures, if known, to be implemented at the meeting, appointing the directors proposed for election or re-election and providing detailed information about them. The power of attorney itself must prove that it is obtained by management, must give the shareholder the opportunity to instruct the power of attorney, and must be signed and dated. In 2007, the SEC adopted rules for the use of “electronic proxies,” that is, proxy documents made available to shareholders via email or on a publicly accessible website. A power of attorney is an agreement that allows one person to perform legal tasks for another person. Proxy arrangements are often seen in stock voting where one person gives permission to another person to vote on their behalf. A power of attorney may be revoked whenever the shareholder deems it appropriate, unless it is made irrevocable. If the shareholder decides to sell his shares in a company, all proxies who have obtained voting rights are automatically removed. In addition, a proxy circular discloses potential conflicts of interest between the Corporation and its directors, officers and auditors.