Pg 20 Flashcards
What are the three different types of proxy?
- specific proxy
– general proxy
– irrevocable proxy
What is a specific proxy?
When the holder of the proxy is given particular instructions and can only vote the shareholder shares for that purpose. I.e.: he can only vote for three specific candidates, so if he votes for anything else his power is void
What is general proxy?
When there are no specific instructions or restrictions, so the proxy has a fiduciary duty to not take any actions that would be adverse to the interest of the shareholder, and if he does, his action is void or voidable at the option of the shareholder. This doesn’t give authority to vote for fundamental changes in the corporation or unusual transactions
What is an irrevocable proxy?
Proxy coupled with an interest. The proxy isn’t just a delegation of the shareholder’s authority, but the holder of the proxy has an interest in the shares. I.e.: Creditor of shares where the shares were pledged as collateral, so the holder got the right to vote the shares until the debt was paid.
What are different situations where an irrevocable proxy could apply?
– creditor shares
– charge
- liens
– property interest
– security interest that protects the property owner for money advanced
– the interest protected is in the corporation that the shares are held as additional security
What is needed for an irrevocable proxy?
An interest in the stock itself or an interest in the corporation generally
If a shareholder borrows money from someone to buy stock in a corporation and the loan includes a five year repayment schedule, so as security, the shareholder pledges his right to vote the shares to that person until the loan is repaid, what kind of proxy is that?
An irrevocable proxy because it is irrevocable until the loan is paid
What is the MBCA position for irrevocable proxies?
A default position of revocability. In order to make it irrevocable it must clearly state in the name that it is irrevocable, and it must be coupled with an interest.
What is a proxy solicitation?
Systematic request from a corporation to authorize the solicitor to vote the shareholder’s shares at an upcoming shareholder’s meeting. Solicitors give the shareholders material information about the issues that are being voted on [proxy statement] and a proxy form for the shareholder to sign and return.
What is the rationale behind proxy solicitation?
It satisfies the corporate quorum requirement because it counts as the shareholder being present by proxy and then the solicitor votes the shares according to the shareholder’s directions.
In order for a proxy to apply, when must occur?
The proxy must be signed and delivered before the shareholders meeting
What is a proxy contest or proxy fight?
This is a struggle between incumbent management and the shareholder challengers about something that will be voted on by the shareholders. Often this means that both the corporation and the challenger solicit shareholder’s proxies to try to control voting of the shareholders.
What is a proxy statement?
Disclosure document that is filed with the SEC by the corporation
What is form of proxy?
This is a card that authorizes the solicitor to vote the shareholder’s stock. A signed proxy authorizes the proxyholder to cast a vote as directed at the shareholder’s meeting.
What is a proxy statement?
This must be given to the shareholders before or at the same time as the proxy solicitation and must disclose all material information about the corporation, its nominees for directorships, management compensation, etc.
