When it comes to decision-making in your building, attending meetings in person is always best. But should the need arise, shareholders and unit owners are permitted to vote in board elections and other matters of corporate governance by proxy or absentee ballot. Proxies are a valuable part of the voting process, but boards need to be aware of the legal implications that can arise when proxies aren't handled properly, as well as the potential for abuse that can result in a subversion of the electoral process. A better understanding of these issues as well as how and why proxies are used and the technical rules governing their issuance and solicitation will greatly benefit your building's election process.
Authorization to Vote
Proxies are written statements by a shareholder or unit owner authorizing another person (the proxy holder) to vote his shares or common interests at a shareholders or special meeting. In some instances, such as a lease amendment vote, proxies may actually substitute for a meeting. The general proxy gives the proxy holder complete discretion to vote any way he wishes. The specific proxy provides the holder with explicit instructions as to how the owner wishes to vote. A hybrid format can also be used in which the proxy is general in nature, but space is provided for specific directions to the proxy holder.
Boards often rely upon the collection of proxies to fulfill the quorum requirement at the annual shareholders meeting or any special meetings, but may not use them at board meetings. Under statutory law and virtually every set of association by-laws, no official business (including board elections) may be conducted without the presence of a quorum, which usually consists of a majority of outstanding shares or common interests, in person or represented by proxy. It's a good idea to remind shareholders or unit owners in writing before the meeting to send in their proxies, if they will be unable to attend, so they can be counted toward the quorum. Include a stamped, self-addressed envelope for return of the proxy and follow up with a door-to-door or telephone lobbying effort. Shareholders and unit owners should be urged to submit a proxy even if they intend to be at the meeting. This way, if a last minute conflict makes it impossible for them to attend, their vote can still be counted.
Sometimes shareholders and unit owners refuse to furnish a proxy because they don't want to take a stand on a contested vote. This is especially true of sponsors or banks (that have acquired their units through foreclosure) that don't wish to take sides in a squabble between residents. Such a loss of votes can account for the failure to achieve a quorum; however this obstacle can be circumvented by providing a space on the proxy in which the proxy holder is instructed to record a vote for quorum purposes only, meaning that the vote is registered as part of the quorum but not counted for one side or another.