Proxy Materials

What Are Proxy Materials?

Proxy materials (also known as the proxy statement) are documents provided by public corporations in order that shareholders can understand how to vote at shareholder meetings, and make informed decisions about how to delegate their votes to a proxy.

These are regulated by the Securities & Exchange Commission (SEC) in accordance with the Securities Exchange Act of 1934 Section 14(a). The company sends the set of documents between 30 to 40 days before an annual shareholder meeting. It's meant to assure shareholders that operations are running smoothly and solicit votes for potential corporate decisions like the election of new directors. 

Key Takeaways

  • Proxy materials are provided by companies to all shareholders before the annual shareholder meeting.
  • These materials allow shareholders to make an informed decision about how they should allocate their voting rights to a proxy if they cannot attend the meeting.
  • Proxy materials are both required and regulated by the SEC.

Understanding Proxy Materials

Proxy materials according to SEC regulations illustrate specific company information so investors have a clear image on the procedures to follow in certain circumstances. For example, a company's proxy materials must specify if there is a standard process for shareholders to contact the board of directors, and if none exist, the proxy materials must provide specific reasons for the absence of such a process. It requires publicly-traded companies to make relevant materials available to shareholders on an annual basis, some of which outlines how the company functions, voting procedures, numbers of outstanding shares, executive compensation, and composition of the board of directors, among other relevant information.

Other information found in the proxy materials describes management, shareholder proposals, and background information that may help shareholders make an educated vote.

As of 2009, the SEC requires all publicly traded companies to post proxy materials on their investor relations website. 

Since mayhem would ensue if every shareholder entered a vote at the annual meeting, they are provided a Proxy Card or Voter Instruction Form to make a decision beforehand. The proxy statement details the number of shares an investor owns and which ones have voting rights. If investors own stocks in the United States, the record date – the cut-off date for shareholders to receive dividends and votes – precedes the annual meeting set by the company. Owning shares prior to the record date grants shareholders voting rights for the upcoming meeting. Not every country uses a record date system. In that case, shareholders can cast votes if they hold the stock on or before the meeting takes place. 

Proxy Voting Instructions

The package of proxy materials will contain disclosure documents of the annual report, proxy statement and most importantly, a Proxy Card or Voter Instruction Form for the upcoming annual shareholder meeting. Shareholders will only receive this if they are a registered owner or beneficial owner. A registered owner or record holder is a direct owner of company shares or indirect owner through a bank or broker-dealer.

On the other hand, beneficial owners exclusively hold shares through a broker-dealer or bank. The majority of investors in the United States own securities as a beneficial owner. In this case, they use a Voter Instruction Form to instruct the broker on how to vote prior to the company meeting.

Article Sources
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  1. Securities And Exchange Commission. "Proxy Rules and Schedules 14A/14C." Accessed Feb. 2, 2021.

  2. U.S. Securities And Exchange Commission. "Annual Meetings and Proxy Requirements." Accessed Feb. 2, 2021.

  3. Securities And Exchange Commission. "Final Rule," Page 7. Accessed Feb. 2, 2021.

  4. U.S. Securities And Exchange Commission. "What is a “registered” owner? What is a “beneficial” owner?" Accessed Feb. 2, 2021.

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