Shareholder’s proxy at the general meeting of a public company

The season for annual general meetings is approaching with the deadline for approval of the financial statements of Polish companies. Shareholders need not participate in the meeting personally, but may appoint a proxy. However, the law provides for certain differences in appointment of proxies in listed and unlisted companies.

The rule is that a shareholder may issue a proxy to several persons at the same time, and one person may act as the proxy for multiple shareholders at the same time and cast votes for each shareholder differently. A proxy may issue a further proxy only if expressly permitted in the original proxy. The proxy must be made in writing, but in a public company may also be made in electronic form in compliance with the conditions set forth in the announcement of the general meeting. Management board members and employees may serve as proxies—an exception to the general rule—but the proxy may cover participation in only one general meeting and must contain voting instructions.

It should be borne in mind that accepting the role of proxy for a shareholder of a public company may entail recognition of the proxy as the holder of a significant block of votes, with the resulting obligation to report on the number of shares held, and even an obligation to announce a tender to acquire a significant block of shares. This applies to the situation where the proxy assumes over 5% of the votes from the company’s shares, and when the proxy is also a shareholder the proxy’s votes are combined with the number of votes covered by the proxy. To eliminate this danger, the proxy should apply only to one general meeting and contain binding written instructions on voting on the resolutions included in the agenda.

A shareholder of a public company may vote as a proxy on adoption of resolutions concerning the shareholder’s liability to the company (which is not permissible in a private company), but the proxy must disclose the circumstances demonstrating the existence of a conflict of interest, obtain voting instructions and vote in accordance with the instructions; no substitution is possible, and the proxy is limited to a single general meeting.

Instructions or dispositions are in the nature of internal arrangements between the shareholder and the proxy. If the proxy does not vote in accordance with the instructions, the votes are not invalid but the proxy may be liable to the shareholder.

It is most important for the shareholder of a public company to properly register the shareholder’s participation in the general meeting, and to be a shareholder as of the record date 16 days before the date of the general meeting. This is proved by the shares filed with the company, a notary or bank (confirmed with a written certificate) or registration of the shares in the shareholder’s securities account. In the case of dematerialised shares, the shareholder must file with the entity maintaining the securities account, no later than the day following the record date, a demand to issue a certificate in the shareholder’s name concerning the right to participate in the general meeting. Unless these formalities are followed by the shareholder, the proxy will not be permitted to participate in the general meeting.

It should also be borne in mind that a shareholder of a public company will be able to participate in the general meeting even the shareholder sold the shares after the record date. In that case, a proxy from the previous shareholder may be useful if the buyer of the shares wants to participate in the general meeting.

Danuta Pajewska, Capital Markets and Financial Institutions practices, Wardyński & Partners