Proxies - a trap for the unwary?
PREPARING PROXIES FOR A MEMBERSHIP MEETING – A TRAP FOR THE UNWARY
Sometimes we have the unhappy duty of telling a client that the proxy they have sent out (or, worse, used) for a member meeting was invalid due to lack of compliance with the Virginia Condominium Act, or simply doesn't constitute a proxy. It seems that many folks think that a proxy is something that is simple to do and should not require professional assistance. Unfortunately that is not the case. There are also a couple myths about proxies that we need to dispel.
Let's start by defining a proxy. A proxy is a document signed by all owners of a lot or unit which grants to another person the right to vote for them at a meeting of the association members. There are requirements for the form of proxy to be used contained in the Virginia Condominium Act, the Nonstock Corporation Act and, often in the bylaws. Some bylaws require proxies to be witnessed - others do not.
Sometimes folks will confuse a proxy with an "absentee ballot" and attempt to give an owner who is not going to be present the ability to vote for a slate of directors in advance. While this is efficient and seems logical, it does not comply with most bylaw requirements.
Most bylaws allow the use of proxies as does the Va Condo Act and the Nonstock Corporation Act. The Condo Act contains the most specifications for a proxy including certain statements that must be included on the proxy form.
The result of not complying with the requirements for each association is that the proxies are invalid and cannot be used. Consequently it only makes sense to spend the nominal amount of legal fees to get your attorney to provide a proxy that is compliant with all requirements that affect your particular associations.
A proxy may be "instructed" or "uninstructed". An instructed proxy dictates to the proxy holder how to vote on a given issue that is coming before the membership at the meeting. An uninstructed proxy gives the proxy holder complete freedom to vote for the grantor as he or she sees fit on any issue.
Myths:
1. All proxies are the same...you only need one form on your computer and you are good to go. Obviously based on the foregoing that is not the case. A special proxy needs to be prepared for each meeting in light of the purpose and issues coming before the membership.
2. Proxies can only be given to other owners. Not the case, unless restricted in that manner by the bylaws, which often do have that restriction. Otherwise a proxy can be given to anyone you choose who can be present at the meeting...your sister, your best friend.
Hopefully this short article has helped to highlight the traps for the unwary with regard to proxy voting. Please let us know if we can help you on this topic.