In our series of posts about company meetings, we’ve previously considered how much notice must be given before a meeting takes place and how best to facilitate debate and discussion at that meeting. This post considers the voting process at a company’s general meeting and how to approach this to ensure votes are counted and recorded accurately.
At a general meeting, various resolutions will be put before shareholders and these resolutions will be voted on by those present. Shareholders who are not present can vote by appointing a proxy. A vote in favour of a resolution means the relevant matter can be implemented, for example a dividend paid or a share buyback carried out. Inevitably, some resolutions can cause more controversy than others, particularly those relating to directors’ pay.
During these votes, there may be a large number of individuals in attendance, so what is the best approach when it comes to accurately counting votes?
Voting on a show of hands
The starting point is a vote by a show of hands where each shareholder (present in person or by proxy) has one vote. The company secretary will usually determine the amount of proxy votes lodged and calculate a breakdown of the votes.
A vote on a show of hands may produce a very obvious result, but if the outcome is less clear cut the chair should count the votes. If scrutineers have been appointed (see below) they will help with the counting.
If a result is reached, the chair declares the result of the vote. But, where the vote on a show of hands is inconclusive, the chair should demand a poll to properly ascertain the view of the shareholders.
Demanding a poll
Typically, the company’s articles will set out when a poll can be demanded and by whom. The chair is usually able to do this but a poll could also be demanded at the company meeting by shareholders which satisfy certain criteria relating to voting rights (for example those holding 10% of the voting rights). If a poll is demanded using the correct procedure and the chair refuses to take it, this will result in any result on a show of hands being invalid.
A company’s articles will usually allow a poll to be demanded either before a show of hands on a particular resolution, or immediately after the result of a show of hands on that resolution.
The poll procedure should be made clear before the meeting. A poll can be carried out using a paper voting card but increasingly this is done electronically. Electronic voting allows for results to be made available instantly and the accuracy of votes for and against to be exact, reducing the risk of shareholders being unhappy at the result. But shareholders who may struggle with technology should be given the opportunity to vote in the traditional manner.
The chair should specify a time for closing the poll. The results of the poll could be declared at the meeting or, if it will take some time for paper votes to be counted, the result could be declared later via the company’s website.
There is no requirement to appoint scrutineers (usually the company’s registrars or auditors) but they will help to improve accuracy when votes are counted and will also ensure the voting process is conducted correctly. The scrutineers will decide on the procedure for issuing voting cards, counting votes and checking votes against any proxy forms issued. The votes will also be checked against the latest version of the register of members to ensure there are no discrepancies.
Votes by proxy
A shareholder entitled to attend and vote at a meeting is entitled to appoint a proxy to do this on their behalf. Confusingly, a single shareholder can appoint more than one proxy as long as each proxy is appointed to exercise voting rights over different shares held by that single shareholder. Subject to the company’s articles, a proxy will count in the meeting’s quorum and will also be able to demand a poll at the meeting.
The proxy should follow the instructions of the appointing shareholder when casting a vote. It is possible for the chair to be appointed as proxy for numerous shareholders. This is where it becomes important for the company secretary to oversee the process to ensure the chair is voting in the way the shareholders have instructed.
Once the result of a vote is clear, whether it is taken by a vote on a show of hands or a poll, the chair should declare the result. The chair’s declaration is conclusive evidence of the result of the vote with no further proof required of the actual number of votes for or against.
This blog was written by Elliot Gibson, PSL assistant, Corporate Unit
For further information please contact:
Sophie Brookes, partner, Corporate Unit
T: 0161 836 7823