Legal Question in Business Law in California
Proxy votes in private club
A flying club has the following regarding proxy votes in its By-laws:
''A majority vote of the voting members present or in proxy
is necessary for the adoption of any resolution and for
the election of a member of the Executive Officers and
Primary Committee Chairmen.
''At every meeting of the members, each voting member shall
have only one vote.
''Proxy votes must be in writing, signed, and dated to be
acceptable, with the exception that a telephone vote may
be considered a proxy during the time of the meeting.''
No other mention of proxies or election procedures are made in the By-Laws or Operating Rules in effect at the time the nominations are made public.
As a convenience, the Secretary is asked to e-mail a ballot to all members which can be used as a proxy. Well after this ballot has been supplied to the members, a member, not on the Board, mails a campaign flyer to the members with a ballot including the names of only his slate of candidates (which he makes clear is his slate) and asks supporters to sign it, date it and give it to him to serve as a proxy. The incumbent Board, who are his opponents, declare these proxies invalid. Do they have any grounds to do so?
1 Answer from Attorneys
Re: Proxy votes in private club
The only requirements as to the form and content of a proxy that I've found are in Corporations Code section 604, and it applies only to corporations with 100 or more shareholders. If this applies to you, look it up.
Otherwise, I'd say that judges in ruling on issues of this kind will lean over backwards to give effect to the intent of the voting shareholders and disregard informalities and deviations in style from the norm.
Further, Corporations Code section 178 gives an expansive definition of a proxy, and I understand that the organization may not narrow that definition through its bylaws. You should obtain and read the definition.
Corporations Code section 705 discusses the validity of proxies generally. It's a long section, but it starts out, "Every person entitled to vote shares may authorize another person or persons to act by proxy with respect to such shares."
In this case, I think these ballots, if intended to be proxies by the members signing them, would be given that effect, when signed, dated, and delivered to the person in charge of the voting in time to be examined and counted. There is a possible problem, however. A proxy is different from an absentee ballot, and the documents you describe might arguably be nothing more than an attempt to vote by absentee ballot. A key difference is that an absentee ballot is designed to be thrown into a ballot box of some kind and counted without third-party intervention, whereas a true proxy is an authorization for a third party to vote the shares or membership interest on behalf of the shareholder or member. Unless it can be seen or readily inferred that the person who solicited these "proxies" or "ballots" was also intended to appear at the meeting and cast them, they might indeed be invalid.
So, without seeing the whole package, I can't be certain, but I'd cast my absentee vote for these being valid proxies.