Ask Habitat: What Wording Should We Use When Drafting a Proxy Form?

HABITAT ANSWERS: The proxy form is a legal document that allows co-op shareholders and condo unit-owners to designate a third party to represent their voting interest at the annual meeting — therefore, oversights in the language can prove catastrophic when it comes time to count the votes. Inattention to detail or failure to comply with the arcane requirements of the Business Corporation Law when composing the form can invalidate the proxy and thus alter the course of an election. So it's understandable why your fellow board members are concerned.

However, no matter the proxy's form or intention, it should be in plain English. So your instincts are on the money.

A confusing form full of legalese is likely to intimidate apartment owners and discourage them from participating. A cover letter explaining what the form is, how it should be filled out, and even how the proxy-holder intends to vote (in the case of a general proxy) is a good way to make owners feel more comfortable with the process.

Here's what you need to know to make sure your proxy forms are valid and fulfilling their intended purpose.

Who. The proxy form must designate a specific person who is deputized to cast the apartment-owner's vote; proxies turning voting power over to "the board" or "the management company" are invalid. The proxy-holder need not be a shareholder or unit-owner in the corporation, and multiple proxy holders may be designated in the event that the intended holder is unable to attend the meeting.

Holding power. Proxies are often used as political tools in contested board elections, and the way a proxy designates its holder gives some insight into that process. A proxy intended simply to foster openness and maximize voter turnout will likely provide a space for the owner to designate his or her chosen proxy-holder, whereas one designed by an incumbent or insurgent group to influence the vote's outcome will most likely have the name of a friendly holder already filled in.

When. The proxy form must be dated when it is issued, for two reasons:

Unless otherwise specified, a proxy form is valid for 11 months. Without a date, there's no way to determine if it's gone stale. 

Apartment owners have the right to revoke their proxies at any time, and a common way of doing that is to issue a new one. When multiple proxies are issued, only the most recent one is valid, and without a date there is no way to determine which proxy prevails. (Beware proxies post-dated to the night of the meeting: they are a sneaky way to deprive the owners of this right.)

Expiration date. On the flip side, a proxy tied to the scheduled date of the annual meeting may be invalidated if the vote is rescheduled. To prevent that, the form should empower the proxy-holder to cast the owner's votes "at any adjourned meeting."

How. Proxies bestow voting rights upon their holders, but they don't necessarily tell the holder whom or what to vote for. This decision often goes hand-in-hand with the question of who holds the proxy: an "open" or "general" proxy delegates the decision-making to the proxy-holder, essentially casting the owner's votes for whichever side that person supports. A "directed" proxy, on the other hand, provides space for the owner to fill in his or her own voting instructions, which the proxy-holder is legally bound to follow.

A vote for not voting. Sometimes annual meetings are stalled because they fail to achieve a quorum when too many owners have withheld their proxies to avoid taking a stand on a contested vote. This obstacle can be circumvented by providing space on the proxy form in which the holder is instructed to record a vote "for quorum purposes only."

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