Ensuring physical participation in general meetings with an increasingly global profile of board members can be challenging. Digital solutions offer an efficient way of assigning proxies and increasing participation in these meetings virtually.
Physical attendance at general meetings by all board members and shareholders is not always possible due to a variety of reasons. In such a case, shareholders can choose to appoint someone to cast the vote on their behalf. Recent world events have also made it harder to hold general meetings in a traditional manner. When they face restrictions, companies may choose to conduct the meetings entirely online (if applicable under their local jurisdiction) or conduct the meeting with a limited number of participants (including board members and shareholders) in physical attendance with an electronic attendance option. Globally, companies have witnessed increased participation when e-meeting (either hybrid or virtual) and e-proxy facilities are in place. E-proxy system comes to the aid by offering a structured online platform to process electronic proxy appointment and voting instructions by shareholders.
Understanding E-Proxy Voting
To ensure good corporate governance, it is important to engage as many shareholders as possible in the undertaking of major decisions. With companies having shareholders who are not based locally, electronic solutions (including e-meeting and e-proxy) are being adopted in an increasing manner. Greater shareholder participation ensures checks and balances are in place for decision making. Proxy voting is an established form of voting in the event that shareholders are unable to participate in important general meetings, such as AGMs or special general meetings to approve a significant transaction. Many companies’ Articles of Association (“AoA”) or bylaws require a minimum number of shareholders (either in person or by proxy) to form a quorum in order to hold validly a meeting. Provisions for proxy voting is to be made in the companies’ AoA or bylaws. A proxy duly appointed by a shareholder is entitled to exercise all or any rights of the shareholder to attend and to speak and vote (either with or without specified voting instructions) on the behalf of the shareholder at general meetings.
Traditionally, proxy forms would be sent by post to the company. E-mail delivery has also been an alternative way used in recent times for submission, but authentication can be an issue. With a secured and robust e-proxy system, shareholders are able to submit proxy appointment electronically and to give specified voting instructions. Stringent authentication and verification procedures are a must.
E-proxy can be provided in the following manners:
- Shareholders may submit an electronic proxy appointment online (either with or without specified voting instructions) to appoint the chairperson of a particular meeting as proxy and cast the vote on their behalf
- Shareholders may appoint an individual as proxy (or several individuals as multiple proxies) (either with or without specified voting instructions) to attend an e-meeting (either hybrid or virtual) and cast the vote on their behalf
Key Benefits of e-Proxy
By using this e-Proxy feature, shareholders and the listed issuers can enjoy the following key benefit:
- Shareholders can review entitled holdings on a daily basis
- Input at any time (24/7) before the submission deadline with one-clicking at the convenience of the shareholders
- Multiple input functions are available including appointment of single/multiple proxies, cancellation and amendment of proxy appointment/voting instructions before the designated deadline
- All information submitted by shareholders are kept private on an encrypted server network
- Shareholders are able to download receipt in relation to the successfully submitted proxy voting instructions for record
- Facilitate CCASS to submit their participants’ proxy appointments/instructions electronically
- Enhance shareholder engagement for submitting electronic proxy appointment/instruction in a secured and efficient manner
- Company can review the proxy appointment status and voting instructions received on a real time basis
- Company can monitor the latest proxy summary to avoid occasional omission of voting by major shareholders or other friendly Individual or institutional investors
- Company can base on the latest voting instructions received and make necessary fine tune to their investor relationship / proxy solicitation policy
- Enhance corporate image by providing an electronic and intuitive system to shareholders for proxy delivery
Preparing your company for e-proxy
According to our research, there is no explicit provisions or prohibition on most of the common jurisdiction of companies listed in Hong Kong or the HKEX Listing Rules on the appointment of proxy by electronic means. In some case where companies‘ AoA or bylaws has provision that require the submission of proxy in writing or physical form, it may require companies to make necessary amendment to enable shareholders to submit proxy appointment by electronic means.
Although e-meeting and e-proxy increase corporate governance, dedicated resources will be required to facilitate an e-meeting, chair the meeting, and manage voting from onsite and/or online and to validate the polls. To reduce errors and improve integrity of e-meetings including secure management of e-proxies, it is advisable to utilize the services of a single service provider that can manage your e-meeting/e-proxy/e-voting through a cohesive interface and database. This will make the entire process easier, ensuring that all shareholders are notified and provided access to relevant materials for assigning proxies electronically.