Proxy voting

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Proxy voting and Delegated voting are procedures for the delegation to another member of a voting body of that member's power to vote in his absence. Proxy appointments can be used to form a voting bloc that can exercise greater influence in deliberations or negotiations. A person so designated is called a "proxy" and the person designating him is called a "principal."

Riddick's Rules notes that under proxy voting, voting for officers should be done by ballot, citing the difficulties involved in authentication if a member simply calls out, "I cast seventeen votes for Mr. X."^[1]

[edit] United States law on proxies

Proxy is defined by supreme courts as "an authority or power to do a certain thing."^[2] A person can confer on his proxy any power which he himself possesses. He may also give him secret instructions as to voting upon particular questions.^[3] But a proxy is ineffectual when it is contrary to law or public policy.^[4] Where the proxy is duly appointed and he acts within the scope of the proxy, the person authorizing the proxy is bound by his appointee's acts, including his errors or mistakes.^[5] When the appointer sends his appointee to a meeting, the proxy may do anything at that meeting necessary to a full and complete exercise of the appointer's right to vote at such meeting. This includes the right to vote to take the vote by ballot, or to adjourn (and, hence, he may also vote on other ordinary parliamentary motions, such as to refer, postpone, reconsider, etc., when necessary or when deemed appropriate and advantageous to the overall object or purpose of the proxy).^[6]

A proxy cannot vote when the principal himself is present and votes. He can vote only in the principal's absence.^[7] Where the authority conferred upon a proxy is limited to a designated or special purpose, a vote for another and different purpose is ineffective.^[8] A proxy in the usual, ordinary form confers authority to act only at the meeting then in contemplation, and in any adjourned-meetings of the same; hence, it may not be voted at another or different meeting held under a new call.^[9] A proxy's unauthorized acts may be ratified by his appointer, and such ratification is equivalent to previous authority.^[10] According to the weight of authority, a proxy only to vote stock may be revoked at any time, notwithstanding any agreement that it shall be irrevocable.^[11] The sale in the meantime by a stockholder of his shares in a corporation or company automatically revokes any proxies made or given to vote in respect of such shares.^[12] And a proxy is also revoked where the party giving it attends the election in person, or gives subsequent proxy.^[13] Hence, a proxy cannot vote when the owner of the stock arrives late or is present and votes.^[14]

[edit] Uses

[edit] Governmental settings

[edit] Legislatures

The rules of some assemblies presently forbid proxy voting. For example, in both houses of the U.S. Congress, as well as in most if not all state legislatures, each member must be present and cast his own vote for that vote to be counted. This can result, however, in the absence of a quorum and the need to compel attendance by a sufficient number of missing members to get a quorum. See call of the house.

Various proposals have been made for a kind of automatic proxy voting in legislatures. For example, it has been proposed that instead of electing members from single-member districts (that may have been gerrymandered), members be elected at large, but when seated each member cast the number of votes he or she received in the last election. Thus, if, for example, a state were allocated 32 members in the U.S. House of Representatives, the 32 candidates who received the most votes in the at-large election would be seated, but each would cast a different number of votes on the floor and in committee. This proposal would allow for representation of minority views in legislative deliberations, as it does in deliberations at shareholder meetings of corporations.

The New Zealand Parliament allows proxy voting. Sections 155-156 of the Standing Orders of the New Zealand House of Representatives specify the procedures for doing so. A member can designate another member or a party to cast his vote. However, a party may not exercise proxies for more than 25% of its members (rounded upwards).^[15] The New Zealand Listener notes a controversial occurrence of proxy voting. The Labour Party was allowed to cast votes on behalf of Taito Phillip Field, who was frequently absent. Theoretically, this was only to be allowed if a legislator was absent on parliamentary business, public business or pressing private business, such as illness or bereavement.^[16]

[edit] Elections

The Spelthorne Borough Council notes that in the United Kingdom, electors may appoint a proxy. An elector can only act as a proxy for two people to whom they are not directly related. However, they can be a proxy for any number of electors if they are directly related to those electors. The voter can change his mind and vote in the election personally as long as his proxy has not already voted on his behalf or applied to vote by mail.^[17]

The Rochdale Metropolitan Borough Council notes that voters must provide a reason for using a proxy, such as being away on vacation. A narrower subset of reasons is permissible if the proxy is to be for more than one election. Except in cases of blindness, the validity of all proxies must be certified by someone, e.g. an employer or doctor.^[18]

Proxy voting played an important role in Guyana politics in the 1960s. Prior to and during the 1961 elections, proxies had been severely restricted. Some restrictions were lifted, and there was a rise in proxy votes cast from 300 in 1961 to 6,635 in 1964. After that election, the Commonwealth Team of Observers voiced concern about proxy votes being liable to fraud. The proxy voting rules were relaxed further, and in 1969, official figures recorded 19,287 votes cast by proxy, about 7% of the total votes cast. Amidst allegations of fraud, more restrictions were placed on proxy voting in 1973; in that year, about 10,000 votes were cast by proxy.^[19]

In 2003, India's People's Representative Act was amended to allow armed forces personnel to appoint a proxy to vote on their behalf.^[20]

Some Chinese provinces allow village residents to designate someone to vote on their behalf. Lily L. Tsai notes that "In practice, one family member often casts votes for everyone in the family even if they are present for the election.^[21]

In Canada, the provinces of Nova Scotia, Ontario, Yukon, Northwest Territories, and Nunavut allow citizens to vote by proxy if they expect to be absent.^[22]

[edit] Nonprofit organization settings

Proxy voting is automatically prohibited in organizations that have adopted Robert's Rules of Order or The Standard Code of Parliamentary Procedure as their parliamentary authority, unless it is provided for in its bylaws or charter or required by the laws of its state of incorporation.^[23] Demeter says the same thing, but also states that "if these laws do not prohibit voting by proxy, the body can pass a law permitting proxy voting for any purpose desired."^[24] RONR opins, "Ordinarily it should neither be allowed nor required, because proxy voting is incompatible with the essential characteristics of a deliberative assembly in which membership is individual, personal, and nontransferable. In a stock corporation, on the other hand, where the ownership is transferable, the voice and vote of the member also is transferable, by use of a proxy."^[25]. While Riddick opins that "proxy voting properly belongs in incorporate organizations that deal with stocks or real estate, and in certain political organizations," it also states, "If a state empowers an incorporated organization to use proxy voting, that right cannot be denied in the bylaws." Riddick further opins, "Proxy voting is not recommended for ordinary use. It can discourage attendance, and transfers an inalienable right to another without positive assurance that the vote has not been manipulated."^[1]

Nonetheless, it is common practice in conventions for a delegate to have an alternate, who is basically the same as a proxy. Demeter's Manual notes that the alternate has all the privileges of voting, debate and participation in the proceedings to which the delegate is entitled.^[24] Moreover, "if voting has for years...been conducted...by proxy...such voting by long and continuous custom has the force of law, and the proceedings are valid."^[26]

Thomas E. Arend notes that U.S. laws allow proxy votes to be conducted electronically in certain situations: "The use of electronic media may be permissible for proxy voting, but such voting is generally limited to members. Given the fiduciary duties that are personal to each director, and the need for directors to deliberate to ensure properly considered decisions, proxy voting by directors is usually prohibited by statute. In contrast, a number of state nonprofit corporate statutes allow for member proxy voting and may further allow members to use electronic media to grant a proxy right to another party for member voting purposes."^[27] Sturgis agrees, "Directors or board members cannot vote by proxy in their meetings, since this would mean the delegation of a discretionary legislative duty which they cannot delegate."^[23]

Proxy voting, even if allowed, may be limited to infrequent use if the rules governing a body specify minimum attendance requirements. For instance, bylaws may prescribe that a member can be dropped for missing three consecutive meetings.^[28]

In 2005, the Libertarian Party of Colorado, following intense debate, enacted rules allowing proxy voting.^[29] A motion to limit proxies to 5 per person was defeated.^[30] Some people favored requiring members attending the convention to bring a certain number of proxies, in order to encourage them to politick.^[31] In 2006, the party repealed those bylaw provisions due to concerns that a small group of individuals could use it to take control of the organization.^[32]

[edit] Corporate settings

Under the common law, shareholders had no right to cast votes by proxy in corporate meetings without special authorization. In Walker v. Johnson,^[33] the Court of Appeals for the District of Columbia explained that the reason was that early corporations were of a municipal, religious or charitable nature, in which the shareholder had no pecuniary interest. The normal mode of conferring corporate rights was by an issue of a charter from the crown, essentially establishing the corporation as a part of the government. Given the personal trust placed in these voters by the king, it was inappropriate for them to delegate to others. In the Pennsylvania case of Commonwealth ex rel. Verree v. Bringhurst,^[34] the court held that members of a corporation had no right to vote by proxy at a corporate election unless such right was expressly conferred by the charter or by a bylaw. The attorneys for the plaintiff argued that the common law rules had no application to trading or moneyed corporations where the relation was not personal. The court found, "The fact that it is a business corporation in no wise dispenses with the obligation of all members to assemble together, unless otherwise provided, for the exercise of a right to participate in the election of their officers." At least as early as the 18th century, however, clauses permitting voting by proxy were being inserted in corporate charters in England.^[35]

Proxy voting is commonly used in corporations for voting by members or shareholders, because it allows members who have confidence in the judgment of other members to vote for them and allows the assembly to have a quorum of votes when it is difficult for all members to attend, or there are too many members for all of them to conveniently meet and deliberate. Proxy firms commonly advise institutional shareholders on how they should vote. Proxy solicitation firms assist in helping corral votes for a certain resolution.^[36]

Domini notes that in the corporate world, "Proxy ballots typically contain proposals from company management on issues of corporate governance, including capital structure, auditing, board composition, and executive compensation."^[37]

Associations of institutional investors sometimes attempt to effect social change. For instance, several hundred faith-based institutional investors, such as denominations, pensions, etc. belong to the Interfaith Center on Corporate Responsibility. These organizations commonly exercise influence through shareholder resolutions, which may spur management to action and lead to the resolutions' withdrawal before an actual vote on the resolution is taken.^[38]

In the absence of his principal from the annual meeting of a business corporation, the proxy has the right to vote in all instances, but he has not the right to debate or otherwise participate in the proceedings unless he is a stockholder in that same corporation.^[24]

The Securities Exchange Commission has ruled that an investment adviser who exercises voting authority over his clients' proxies has a fiduciary responsibility to adopt policies and procedures reasonably designed to ensure that the adviser votes proxies in the best interests of clients, to disclose to clients information about those policies and procedures, to disclose to clients how they may obtain information on how the adviser has voted their proxies, and to keep certain records related to proxy voting.^[39] This ruling has been criticized on many grounds, including the contention that it places unnecessary burdens on investment advisers and would not have prevented the major accounting scandals of the early 2000s.^[40]

It is possible for overvotes and undervotes to occur in corporate proxy situations.^[41] An International Journal of Humanities and Social Sciences paper noted that proxy voting might be particularly useful in situations in which votes are cast as the discussion is ongoing (rather than at the end of a period of discussion).^[42]

In Germany, corporate proxy voting is done through banks.^[43]

[edit] Delegated voting

An illustration of delegated voting. Everyone to the right of the dotted blue line voted directly on some issue. Everyone else voted by proxy. The numbers show how many people each representative represents (including the representative).

In delegated voting, also called transitive proxy, delegable proxy or liquid democracy, the proxy is transitive; that is, one's vote can be further delegated to his proxy's proxy. The Common Good Bank is being organized along these lines.^[44] It is also used by the World Parliament Experiment. Riddick's Rules seems to ban delegated voting, noting, "Proxy votes are non-transferable, containing the name of the member transferring the proxy, the person to whom the proxy is granted, and the name of the person for whom he wishes the vote to be cast or the opinion desired by the transferring member."^[1]

The first computer system using delegated voting was invented by Mikael Nordfors, a pioneer in the field of e-democracy from Sweden and was used by the Stockholm University of data science in 2001 for a short period of time. The system was called Vivarto NetConference Plus.

The most successful application of this delegated voting system is practised by the local political party demoex, who got their first seat in the local parliament in the city council of Vallentuna, near Stockholm, Sweden in 2002. The first years of activity in Demoex have been evaluated by the Mitthögskolan University in Sweden in a paper called Flexible representation by use of delegated voting - a case study of practical use by Karin Ottesen in 2003. In the Demoex case it was also possible to vote directly, even if you had delegated your vote to a proxy. In this case the proxy vote will be overruled by the direct vote. It was also possible to change the proxy at any time. In November 2004, the company who produced the Vivarto Netconference plus went bankrupt, leaving the system unsupported. It was released as open source, but no-one has been able to seriously recover it.

An International Journal of Humanities and Social Sciences paper noted that delegated voting might be particularly useful in situations in which votes are cast as the discussion is ongoing, rather than at the end of a period of discussion.^[45]

According to Carl Milsted, delegated voting resembles the proxy system L. Neil Smith has in The Probability Broach or in an episode of Yes, Prime Minister where such a staged voting system is considered, and then rejected.^{[citation needed]}

[edit] External links

• Direct Representation -- Advocate a kind of proxy voting by representatives in legislatures.
• European physical proxy agency in annual meetings

[edit] References