In this post, I will discuss Secretarial Standards related to Proxies under SS – 2.
Right to Appoint:
A Member entitled to attend and vote is entitled to appoint a Proxy, or where that is allowed, one or more proxies, to attend and vote instead of himself and a Proxy need not be a Member. [Paragraph 6.1 of SS – 2]
However, a Proxy shall be a Member in case of companies with charitable objects etc. and not for profit registered under the specified provisions of the Act. [Background Paragraph 1 after Paragraph 6.1 of SS – 2]
A Proxy can act on behalf of Members not exceeding fifty and holding in the aggregate not more than ten percent of the total share capital of the company carrying Voting Rights. [Background Paragraph 2 after Paragraph 6.1 of SS – 2]
I feel, this is restriction, particularly quantitative one, does not serve any purpose.
However, a Member holding more than ten percent of the total share capital of the company carrying Voting Rights may appoint a single person as Proxy for his entire shareholding and such person shall not act as a Proxy for another person or shareholder. [Background Paragraph 2 after Paragraph 6.1 of SS – 2]
If a Proxy is appointed for more than fifty Members, he shall choose any fifty Members and confirm the same to the company before the commencement of specified period for inspection. In case, the Proxy fails to do so, the company shall consider only the first fifty proxies received as valid.
Form of Proxy:
An instrument appointing a Proxy shall be either in the Form specified in the Articles or in the Form set out in the Act. [Paragraph 6.2.1 of SS – 2]
The instrument of Proxy shall be signed by the appointer or his attorney duly authorised in writing, or if the appointer is a body corporate, be under its seal or be signed by an officer or an attorney duly authorised by it. [Background Paragraph 1 after Paragraph 6.2.1 of SS – 2]
An instrument of Proxy duly filled, stamped and signed, is valid only for the Meeting to which it relates including any adjournment thereof. [Paragraph 6.2.2 of SS – 2]
Stamping of Proxies:
An instrument of Proxy is valid only if it is properly stamped as per the applicable law. Unstamped or inadequately stamped Proxies or Proxies upon which the stamps have not been cancelled are invalid. [Paragraph 6.3 of SS – 2]
As per good governance practice, company may advise about amount of stamp applicable to members.
Execution of Proxies:
The Proxy-holder shall prove his identity at the time of attending the Meeting. [Paragraph 6.4.1 of SS – 2]
How to prove identity? Every notice may suggest list of valid identity document proof.
An authorised representative of a body corporate or of the President of India or of the Governor of a State, holding shares in a company, may appoint a Proxy under his signature. [Paragraph 6.4.2 of SS – 2]
Proxies in Blank and Incomplete Proxies:
A Proxy form which does not state the name of the Proxy shall not be considered valid. [Paragraph 6.5.1 of SS – 2]
Undated Proxy shall not be considered valid. [Paragraph 6.5.2 of SS – 2]
If a company receives multiple Proxies for the same holdings of a Member, the Proxy which is dated last shall be considered valid; if they are not dated or bear the same date without specific mention of time, all such multiple Proxies shall be treated as invalid. [Paragraph 6.5.3 of SS – 2]
This standard is in clear conflict with Standard 6.1. Standard 6.1 give right to appoint one or more proxies and Standard 6.5.3 say only last single proxy shall be valid for same holdings. Single (or joint) shareholder hold single portfolio, which is single holding.
Deposit of Proxies:
Proxies shall be deposited with the company either in person or through post not later than forty-eight hours before the commencement of the Meeting in relation to which they are deposited and a Proxy shall be accepted even on a holiday if the last date by which it could be accepted is a holiday. [Paragraph 6.6.1 of SS – 2]
The words “not later than” add no value.
Any provision in the Articles of a company which specifies or requires a longer period for deposit of Proxy than forty-eight hours before a Meeting of the company shall have effect as if a period of forty-eight hours had been specified in or required for such deposit. [Background Paragraph 1 after Paragraph 6.6.1 of SS – 2]
As, Standard 6.6.1 provide no exemption for any article, this paragraph add no value.
If the Articles so provide, a Member who has not appointed a Proxy to attend and vote on his behalf at a Meeting may appoint a Proxy for any adjourned Meeting, not later than forty-eight hours before the time of such adjourned Meeting. [Paragraph 6.6.2 of SS – 2]
Revocation of Proxies:
If a Proxy had been appointed for the original Meeting and such Meeting is adjourned, any Proxy given for the adjourned Meeting revokes the Proxy given for the original Meeting. [Paragraph 6.7.1 of SS – 2]
This simply says that when a new proxy is appointed for adjourned meeting, original proxy stand revoked.
A Proxy later in date revokes any Proxy/Proxies dated prior to such Proxy. [Paragraph 6.7.2 of SS – 2]
This paragraph clearly goes against the Paragraph 6.1.
Proxy is valid until written notice of revocation has been received by the company before the commencement of the Meeting or adjourned Meeting, as the case may be. [Paragraph 6.7.3 of SS – 2]
How a proxy revoked by virtue of earlier two paragraphs, still valid for the sake of this paragraph?
An undated notice of revocation of Proxy shall not be accepted. A notice of revocation shall be signed by the same Member(s) who had signed the Proxy, in the case of joint Membership. [Background Paragraph 1 after Paragraph 6.7.3 of SS – 2]
A Proxy need not be informed of the revocation of the Proxy issued by the Member. [Background Paragraph 1 after Paragraph 6.7.3 of SS – 2]
This does not sound good, even if legally valid. Secondly, it depend upon contract between principal and agent or say in this case, member and proxy.
When a Member appoints a Proxy and both the Member and Proxy attend the Meeting, the Proxy stands automatically revoked. [Paragraph 6.7.4 of SS – 2]
Inspection of Proxies:
Requisitions, if any, for inspection of Proxies shall be received in writing from a Member entitled to vote on any Resolution at least three days before the commencement of the Meeting. [Paragraph 6.8.1 of SS – 2]
Note, requisition for inspection of proxies may be well 24 hours before delivery of most of the proxies.
Proxies shall be made available for inspection during the period beginning twenty-four hours before the time fixed for the commencement of the Meeting and ending with the conclusion of the Meeting. [Paragraph 6.8.2 of SS – 2]
Inspection shall be allowed between 9 a.m. and 6 p.m. during such period. [Background Paragraph 1 after Paragraph 6.8.2 of SS – 2]
A fresh requisition, conforming to the above requirements, shall be given for inspection of Proxies in case the original Meeting is adjourned. [Paragraph 6.8.3 of SS – 2]
Record of Proxies:
All Proxies received by the company shall be recorded chronologically in a register kept for that purpose. [Paragraph 6.9.1 of SS – 2]
In case any Proxy entered in the register is rejected, the reasons therefor shall be entered in the remarks column. [Paragraph 6.9.2 of SS – 2]
At the end of this post, I want to mention that some provisions I criticised here may be taken from the Act or relevant Rules and in such case may be treated my suggestion for relevant changes the Act or these Rules.
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