Sometimes we have the unpleasant responsibility of telling a board that the proxy they have sent out (or worse, used) for a membership meeting was invalid due to lack of compliance with their bylaws and/or Virginia Statutes, or that it simply doesn’t constitute a proxy. It seems that many people 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 of 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 when an owner is unable to attend the meeting. Proxies also count towards establishing a quorum, which is required in order for the association to conduct business at a membership meeting. Proxies are a way of making sure that every owner who wants to participate in the governance of his association has a means of doing so even if he can’t physically attend the meeting.
Most association bylaws allow the use of proxies, as do the Virginia Condominium Act, the Virginia Property Owners Association (POA) Act and the Nonstock Corporation Act. 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 at the meeting as he or she sees fit on any issue. Sometimes a proxy will be confused with an “absentee ballot” that gives an owner who is not going to be present at the meeting the ability to vote for a slate of directors in advance. While this is efficient and seems logical, it does not comply with the Condominium Act, the POA Act and most bylaw requirements. The person who holds a proxy for another person must be present at the membership meeting where a vote is taking place in order for the vote to be counted.
So, how do you make sure every proxy (and vote) counts? It is the responsibility of the board of directors to insure that proxies being distributed to owners for signature meet all legal requirements. The Virginia Condominium Act, the Nonstock Corporation Act and, most often, the association’s bylaws contain provisions that must be included in your proxy. The Condominium Act contains the most specifications for a proxy including certain statements that must be included on the proxy form. Because there may have been changes in the various statutes regarding proxies since your association bylaws were adopted, there may be conflicts between the statutes and your bylaws. For example, several years ago the requirement that proxies had to be witnessed was removed from the Condominium Act; however, some bylaws still require proxies to be witnessed. If your bylaws require proxies to be witnessed that requirement must be met even though the Condominium Act no longer requires it.
We recommend that all owners (even Board members) return their signed proxies to the person instructed in the proxy, even if you plan to attend the meeting. If you wake up the morning of the meeting with the flu, you end up having to work late that night or you have a flat tire on the way to the meeting, your vote will still count. If you do submit a proxy but end up attending the meeting, you simply have to ask that your proxy be returned to you so that you can vote and participate in the meeting in person.
- 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. Likewise, a proxy that meets the legal requirements for one association most likely will not meet the legal requirements for another association.
- Proxies can only be given to other owners. Also not true, unless your bylaws specifically so state (this, however, is often the case – especially with older bylaws). Otherwise a proxy can be given to anyone you choose who can be present at the meeting…your sister, your best friend.
The result of not complying with legal requirements and 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 prepare a proxy that is compliant with all requirements for your association. Especially when considering the printing and mailing costs of sending notices and proxies to all owners only to find that the meeting has to be postponed because the proxies are invalid – and then having to expend those costs all over again to schedule another meeting. An even worse scenario is to find out that all business conducted at a meeting (including the election of directors) may be found to be invalid because the proxies were invalid.