An important reform under the Companies Act 2006 (the ‘2006 Act’), which has managed to avoid the glare of publicity, is the right of members of a company limited by guarantee (usually not-for-profit organisations) to appoint a proxy, to attend, vote and also to speak at the company’s general meeting.
Under the previous regime (the Companies Act 1985), companies limited by guarantee were not obliged to allow members to appoint a proxy, although they could make provision in their articles of association for members to do so.
Under the 2006 Act, any provisions in a not-for-profit company’s articles of association which specifically exclude the right of members to appoint proxies will be automatically null and void. Therefore, if you have not recently reviewed your articles of association, we strongly advise you to do so. Any provisions excluding the appointment of proxies should be deleted and, ideally, where your articles are silent on the subject of proxies, you might consider outlining the procedure that needs to be followed for appointing proxies.
You also need to be aware that, under the 2006 Act, notices calling for a general meeting must include a prominent statement alerting members to their right to appoint proxies. If you do not comply, an offence is committed by every officer of the company which is in default.
Finally, other changes relating to proxies enshrined in the 2006 Act include:
- changes to the timing requirements for lodging proxy notices. Any provision in the articles stating that notice for appointing a proxy has to be received more than 48 hours (calculated on the basis of working days only) before the time of the meeting, is void; and
- changes to the rules relating to proxies being entitled to vote on a show of hands. This is now allowable under the 2006 Act unless otherwise stated in the company articles.
Please get in touch with our corporate lawyers if you need legal guidance for your business.
