Before the general meeting of an organization or a mutual fund, shareholders receive a package in the mail that contains a number of documents: financial reports, investment data as well as documents that announce critical issues ─ for example, proposals for changes to an organization’s share structure or their mergers and acquisitions. Unit holders or shareholders, the real owners of the mutual fund or company, vote on these matters at a general (often annual) meeting. However, if the shareholder does not have the ability to go to the meeting, she or he may vote on proposals by way of a proxy; proxy statements are among the documents included inside the pre-meeting mailing packages.
What is the purpose of proxy voting?
Proxy voting allows shareholders to influence an organization’s or mutual fund’s operations or governance which might fall out of the perimeters of financial considerations. Therefore, it’s important for shareholders to engage in the voting process and make their decisions based on a complete understanding of the legal documentation and information given to them.
At the shareholder meeting, investors who have common shares (or a mutual fund unit) typically receive a single vote per share (unit), unless they have shares that carry extra voting provisions. The shareholders absent from the meeting who haven’t used proxy cards that bear their signature get their votes abstained — they’ll count neither for nor against proposals tabled at a meeting.
However, shareholder proxy voting permits shareholders to vote without attending the shareholder meeting; therefore, investors have the ability to vote on and own equities in mutual funds and companies which may be registered and located around the world.
Electronically Voting Proxies
In the era of the internet, investors can not only buy and sell their stocks online, but also cast proxy votes. Official documents are given to shareholders in electronic format then they can log onto a system using a control number or personal ID number and vote for or against the presented resolutions. Entire documentation delivery processes may be automated electronically.