This short note covers proxies and Ontario Not-for-Profit Corporations Act (“ONCA”) corporations. In terms of proxies, Section 64(1.1) of ONCA provides: “A member may appoint a proxy holder only if the articles or by-laws of the corporation permit it.” Therefore, unless an ONCA non-profit corporation specifically has a provision allowing for proxies in its by-laws (or potentially in its articles), the default rule is that proxies are prohibited.
The prescribed rules about the “form of proxy” only apply if the by-laws (or articles) allow for voting by proxy.
Under the old Ontario Corporations Act (OCA), members had a right to proxies. This is no longer the case under ONCA, and unless the articles or by-laws provide for proxies, then under ONCA a member does not have the right to use them.
The default rule under ONCA is that if proxies are used, the proxy holders need not be members, but that can be overridden by the ONCA corporations governing documents. S. 64(1.2) of ONCA provides: “A proxyholder need not be a member of the corporation unless so required by the articles or by-laws of the corporation.”]
A proxy form allows a member of a corporation to designate another person to attend a meeting on their behalf and cast votes as directed by the member. This ensures that members who cannot attend meetings still have their voices heard in decision-making processes. It is important to note that in a corporation’s by-laws, a corporation can determine whether or not proxies are allowed.
There are several pros to allowing proxy voting at members’ meetings. Allowing for proxy voting can increase member participation as it gives individuals who are unable to attend the meeting the opportunity to participate. Additionally, it can be convenient for members to appoint a proxy if they have conflicting obligations or otherwise are having difficulty attending. Proxy voting also allows for a broader representation of your members by ensuring that votes are cast across a wider section of the organization’s membership.
However, there are several cons to having proxy voting by membership. Allowing proxy voting can present a logistical challenge for an organization, as managing proxies and verifying their legitimacy can be burdensome. Additionally, there is the risk of reducing membership transparency as there will be a lack of face-to-face discussion and deliberation among members if proxy voting becomes the norm. There is a greater likelihood that an individual or a small group will get a large number of proxies from disinterested members and use that to control the members’ meeting.
With the advent of online meetings or mixed in-person and online meetings, there is less need for proxies, and many non-profits are changing their governing documents to prohibit proxies. If your organization opts to allow members to vote by proxy, it is crucial to ensure that your organization uses the correct proxy form for several reasons: First, following the proper proxy form guidelines ensures compliance with the law. Non-compliance can result in decisions made at meetings being invalid, which could lead to issues regarding the validity of corporate actions. Second, a proxy form ensures that the member’s intentions are clearly communicated and followed, which maintains the transparency and integrity of the voting process at members’ meetings. Third, inadequately completed or unclear proxy forms can lead to disputes over how votes were cast. Having a proper form in place minimizes the likelihood of confusion or challenges to decisions made during meetings.
Proxy Created by ONCA Corporation
If the ONCA corporation will be circulating a form of proxy then it must ensure that the form is compliant with the ONCA Regulations. The Form of Proxy is outlined in O. Reg. 395/21, Section 3, titled “Form of Proxy”. This section reads as follows:
Form of proxy
- (1) In this section,
“form of proxy” means a form in writing that becomes a proxy when completed and signed by or on behalf of a member.
(2) This section applies to a form of proxy referred to in subsection 64 (3) of the Act.
(3) A form of proxy that is created other than by a member of a corporation shall,
- indicate, in bold type, the meeting at which the proxy is to be used;
- indicate, in bold type, that a member may appoint a proxyholder, other than a person designated in the form of proxy, to attend and act on the member’s behalf at the meeting, and contain instructions as to the manner in which the member may do so;
- contain a designated blank space for a signature and the date of signature;
- provide a means for the member to designate a different person as proxyholder, if the form of proxy designates a person as proxyholder;
- provide a means for the member to specify that the membership registered in their name is to be voted for or against each matter, or group of related matters, identified in the notice of meeting, other than the appointment and remuneration of an auditor or person to conduct a review engagement of the corporation, and the election of directors;
- provide a means for the member to specify that the membership registered in their name is to be voted or withheld from voting in respect of the appointment and remuneration of an auditor or person to conduct a review engagement of the corporation, or the election of directors; and
- state that the membership represented by the proxy is to be voted or withheld from voting, in accordance with the instructions of the member, on any ballot that may be called for and that, if the member specifies a choice under clause (e) or (f) with respect to any matter to be acted upon, the membership is to be voted accordingly.
(4) A form of proxy that is created by a member of a corporation shall indicate,
- the meeting at which the proxy is to be used;
- whether the proxy is solicited by or on behalf of management of the corporation; and
- the powers granted under the proxy.
(5) A form of proxy may include a statement that the member confers authority with respect to matters for which a choice is not provided in accordance with clause (3) (e) only if the form of proxy states, in bold type, how the proxyholder is to vote the membership in respect of each matter or group of related matters.
(6) A form of proxy that confers discretionary authority in respect of amendments to matters identified in the notice of meeting or other matters that may properly come before the meeting shall contain a statement to that effect.
(7) If a form of proxy is not dated, the proxy is deemed to have been dated on the date it is sent.
(8) If a form of proxy is sent in electronic form, the requirement in clauses (3) (a) and (b) and subsection (5) that certain information be set out in bold type is satisfied if the information is set out in a different manner so as to draw attention to the information.
Proxy created by member
The above form of proxy is for the corporation but if the form of proxy is created by the member (as opposed to by the corporation) then S. 3(4) of the Regulations states:
(4) A form of proxy that is created by a member of a corporation shall indicate,
(a) the meeting at which the proxy is to be used;
(b) whether the proxy is solicited by or on behalf of management of the corporation; and
(c) the powers granted under the proxy.
And also s. 64(2) of ONCA provides:
Signature
(2) A proxy must be signed,
(a) by the member or the member’s attorney; or
(b) if the member is a body corporate, by an officer or attorney of the body corporate duly authorized.
All of the above applies to members’ meetings. Proxies cannot be used for directors’ meetings.
If you require assistance in preparing proxy forms or updates to your governing documents, please contact us.