101 on Proxy in Company General Meetings

by Lavinia Kumaraendran ~ 10 May 2019

101 on Proxy in Company General Meetings

What is a Proxy?

In essence, a proxy is someone appointed to act on behalf of a corporation or an individual at a general meeting – to participate and vote at the said meeting.

Section 334(1) of the Companies Act 2016 (“CA 2016”) defines a proxy as another person, appointed by a member of a company, to exercise all or any of the said members rights to attend, participate, speak and vote at a meeting of members of a company.

The case of Lee Ah Hah @ Lee Yean & Anor v Teh Chin Lan & Ors [2019] MLJU 106 held that the words and actions of a proxy at the meeting are those of his appointer, unless proven otherwise.

The right to appoint a proxy is important as it allows a shareholder who is unable to attend the meeting in person to appoint a representative to vote in his absence. In this regard, every AGM notice must disclose, with reasonable prominence, a statement on the shareholders’ rights to appoint proxies, and that a proxy need not be a shareholder of the company (Section 335 of CA 2016).

In all fairness, an appointed proxy would have the same rights as the appointing shareholder to speak at the meeting. Also, a shareholder may appoint more than one proxy to attend and vote at the same meeting provided the member specifies the proportion of the shareholdings to be represented by each proxy.

The words and actions of a proxy at the meeting are those of his appointer...

Who can be a Proxy

There are no limitations in the CA 2016 as to who can be a proxy. It is a general rule that a member of a company is entitled to appoint any person to act as his proxy. Previously, under the older Companies Act 1965 (“CA 1965”), members were only allowed to appoint members, an advocate, an approved company auditor or a person approved by the Registrar to be his proxy.

The CA 2016 has removed the restriction on who is qualified to be appointed as a proxy and currently, a member can appoint anyone to be their proxy.

How are Proxies Appointed?

Section 334(3) CA 2016 lays out the statutory requirements in the appointment of a Proxy. Generally, listed companies would issue the relevant proxy form to be completed along with the notice of the meeting.  The proxy forms of listed companies must be designed in a manner which allows the shareholder appointing a proxy to indicate how the proxy is to vote in relation to each resolution. This is to avoid a situation where an appointed proxy votes in contradiction to the wishes of the appointing shareholder or to ensuring that the intention of the appointing shareholder is reflected in the voting process.

Documents such as the proxy form and the power of attorney under which such an instrument is signed has to be deposited at the registered office of the company, or any other place in Malaysia as specified in the notice of the meeting not less than:

  • 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote; OR
  • Not less than 24 hours before the time of the taking of the poll.

Otherwise, the proxy forms may be regarded as invalid in accordance with Section 334(3) of the CA 2016.

The board should ensure that the company has a process in place to check the validity of the proxy forms. In fact, the forms should be counted and verified by the share registrar once they have been received.


Challenging the Validity of a Proxy

Case law has always reverted to the Companies Act in determining the validity of a proxy or his appointment. In one of the few Court of Appeal cases that discussed the validity of a proxy - Fairview Schools Bhd v Indrani A/P Rajaratnam & Ord (NO 2) [1998] 1 MLJ 110, the court held that the statutory requirements as laid out in the Companies Act have to be complied with or the appointment of the proxy can be deemed to be invalid. In this case, the trial judge had taken the view that the non-compliance of a requirement in appointing a proxy under the CA 1965 did not invalidate the appointment.

However, on appeal, the Court of Appeal held that such a view was incorrect. It was held that all the requirements under the Companies Act mean what they say and have to be complied with accordingly.

In the recent case of Garden Meridien Sdn Bhd v Riviera III Apartment JMB [2018] MLJU 2019, the tribunal that heard the matter acknowledged that there was a lack of case law on the point of challenging the validity of a proxy. The tribunal was of the view that the law on proxies was one governed by statute and not common law, as there is no such right in common law to appoint a proxy. On that basis, it was held that the appointment of a proxy has to meet all the legal requirements specified in the statute and thus, any proxy appointment cannot be accepted if such legal requirements are not met.

Listed below are the most common grounds to challenging the validity of a proxy (This list is non exhaustive):

  1. Section 334(1) – generally, the member appointing a proxy should indicate how the proxy is to vote in relation to each resolution.
  2. Section 334(2) – if more than one proxy is appointed, the proportion of shareholdings to be represented by each proxy has to be specified.
  3. Section 334(3) – the instrument appointed the proxy has to be deposited at the place specified within the time limit as earlier elaborated upon.