What is a Proxy Vote? (Overview, Rules, and Guidelines)

  • By: Adam Wire
  • January 22, 2025
Proxy Vote
Reading Time: 3 minutes

Each member of your board of directors has a duty to demonstrate corporate governance and lead the organization in a positive direction. Whether it’s a corporate business or a nonprofit, board members and other stakeholders come together at board meetings and annual general meetings to make decisions that shape the vision of the organization. Ideally, each board member would be able to attend every meeting in-person, but that’s not always possible due to scheduling issues, the travel demands, and other life events. 

One common solution for this is the proxy vote. Proxy votes allow board members to have their say on key topics without physically being in the boardroom. In this article, we’ll explain how proxy voting benefits shareholders and the organization before diving into the mechanics of conducting an effective proxy vote.

What is a Proxy Vote?

A proxy vote is a legal mechanism in which a person or voting body who isn’t able to attend a meeting delegates their voting rights to another party to vote on their behalf. Proxies can come in multiple formats: 

  • A general proxy where the proxy holder can make their own voting decision
  •  A specific proxy where they must vote according to the wishes of the original voter
  • A hybrid format where the proxy holder has to follow certain directions. 

Proxy votes are an important resource for modern organizations. A proxy vote enables boards to meet the quorum required for an official meeting, hold a simple majority vote, and prevent delays. 

The terms of a quorum are typically detailed in an organization’s bylaws, specifying the minimum attendance required to conduct official business. Proxy votes allow shareholders to participate in decision-making even if they cannot attend a meeting, ensuring their voices are heard on important matters. These practices promote healthy governance and help organizations operate smoothly and equitably.

Free Tool

Navigate board software options wisely using our comprehensive vendor comparison tool

How a Proxy Vote Works

Proxy voting works best when it is a structured process that every board member can easily follow. The rules for how a proxy vote works will differ among organizations depending on the makeup of their classified board, but here is a general guide for the task: 

  • The board of directors must deliver relevant materials to all stakeholders in advance of the meeting. One of those documents is a proxy statement, which provides information on the topics that will be discussed and voted on during the meeting. The statement will also include instructions on proxy voting. Depending on the organization, proxy votes can be sent through the mail, over the phone, or online before a specified cutoff time. 
  • If a stakeholder chooses to appoint a proxy, they must then complete a proxy form to declare their reasons for doing so, whether the proxy can make their own decisions or not, and their voting preferences for each topic. As a mark of good governance, the organization should verify the proxy forms to prove that each party stands by the statement. 
  • Proxy votes are counted and verified alongside other votes by the board or an independent auditor before announcing the final results. The board is responsible for keeping detailed records of the meeting and related processes to maintain an accurate account of the proceedings.

Proxy Vote Rules and Guidelines

The use of a proxy vote is a valid tool in many situations, but organizations and stakeholders need to be careful with how they use them. Regulatory bodies will have several rules in place that must be followed to avoid facing significant fines and legal sanctions. Engaging in a transparent and ethical proxy voting process also builds trust in the organization as a whole, boosting its reputation. Public companies are subject to harsher regulations than any other body, but private entities and nonprofits also have to comply with relevant laws. 

When appointing a proxy, it’s important to choose a person or group that understands your perspective and takes their responsibilities of representing the shareholders’ vote seriously. Utilizing a proxy doesn’t mean stakeholders should remove themselves from the decision-making process. They should deliver clear instructions to proxies if they want them to use their voting powers in an exact way. Stakeholders should also review proxy statements and other reports to remain informed on the state of the organization and the greater context around major choices. 

Organizations also play their part in managing proxy voting by providing clear information regarding upcoming proposals to stakeholders early in the process. This ensures voters and voting bodies are informed ahead of key meetings and can make decisions from a place of higher understanding.

Getting Started With OnBoard

Proxy votes allow board members to remain engaged even if they can’t attend a meeting. This is becoming increasingly important, as remote and hybrid work becomes standard.

To effectively govern, modern organizations turn to board management software to keep operations organized and efficient. OnBoard provides several features that enable boards to conduct business better. From approvals and voting functionality to a secure messenger and lifecycle management tools, OnBoard delivers a seamless platform for directors and leadership to make high-impact decisions from any device.

Interested in how OnBoard can support your company’s work? Download our free board meeting agenda template to get started.

Board Meeting

Ensure effective, efficient meetings with our comprehensive Board Meeting Agenda Template.

Start a free trial of OnBoard to see what the platform can do for your hospital board of directors.

About The Author

Adam Wire
Adam Wire
Adam Wire is a Content Marketing Manager at OnBoard who joined the company in 2021. A Ball State University graduate, Adam worked in various content marketing roles at Angi, USA Football, and Adult & Child Health following a 12-year career in newspapers. His favorite part of the job is problem-solving and helping teammates achieve their goals. He lives in Indianapolis with his wife and two dogs. He’s an avid sports fan and foodie who also enjoys lawn and yard work and running.