2020 Georgia Code
Title 14 - Corporations, Partnerships, and Associations
Chapter 2 - Business Corporations
Article 7 - Shareholders
Part 2 - Voting
§ 14-2-722. Proxies

1. A shareholder may vote his or her shares in person or by proxy.
2. A shareholder or his or her agent or attorney in fact may appoint a proxy to vote or otherwise act for the shareholder by signing an appointment form or by an electronic transmission. An electronic transmission must contain or be accompanied by information from which it can be determined that the shareholder, the shareholder's agent, or the shareholder's attorney in fact authorized the electronic transmission.
3. An appointment of a proxy is effective when a signed appointment form or electronic transmission of the appointment is received by the inspector of election or the officer or agent of the corporation authorized to tabulate votes. An appointment is valid for 11 months unless a longer period is expressly provided in the appointment.
4. An appointment of a proxy is revocable unless the appointment form or electronic transmission states that it is irrevocable and the appointment is coupled with an interest. Appointments coupled with an interest include the appointment of:
   1. A pledgee;
   2. A person who purchased or agreed to purchase the shares;
   3. A creditor of the corporation who extended it credit under terms requiring the appointment;
   4. An employee of the corporation whose employment contract requires the appointment; or
   5. A party to a voting agreement created under Code Section 14-2-731.
5. The death or incapacity of the shareholder appointing a proxy does not affect the right of the corporation to accept the proxy's authority unless notice of the death or incapacity is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises his or her authority under the appointment.
6. An appointment made irrevocable under subsection (d) of this Code section is revoked when the interest with which it is coupled is extinguished.
7. A transferee for value of shares subject to an irrevocable appointment may revoke the appointment if he or she did not know of its existence when he or she acquired the shares and the existence of the irrevocable appointment was not noted conspicuously on the certificate representing the shares or on the information statement for shares without certificates.
8. Subject to Code Section 14-2-724 and to any express limitation on the proxy's authority stated in the appointment form or electronic transmission, a corporation is entitled to accept the proxy's vote or other action as that of the shareholder making the appointment.
9. Any copy, facsimile transmission, or other reliable reproduction of the writing or electronic transmission created pursuant to subsection (b) of this Code section may be substituted or used in lieu of the original writing or electronic transmission for any and all purposes for which the original writing or electronic transmission could be used, provided that such copy, facsimile transmission, or other reproduction shall be a complete reproduction of the entire original writing or electronic transmission.
10. A corporation may adopt bylaws authorizing additional means or procedures for shareholders to exercise rights granted by this Code section.

(Code 1981, §14-2-722, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1993, p. 1231, § 8; Ga. L. 1997, p. 1165, § 7; Ga. L. 1999, p. 405, § 6.)

- For article, "The Dynamics Among Shareholders, Directors, and Officers in Corporate Organizations Under Georgia Law," see 37 Mercer L. Rev. 79 (1985). For note discussing revocation of proxy upon maker's incapacity, see 17 Ga. St. B. J. 88 (1980).

Source: Model Act, § 7.22. This replaces former § 14-2-119.

Subsection (a) provides that shareholders may vote in person or by proxy. Subsection (a) gives voting rights to "shareholders," and not to pledgees, and in that sense is consistent with the rule of former § 14-2-117(i), which was more specific. Pledgees obtain voting rights only through the grant of a proxy, as provided in this section.

Subsection (b) states the general rules on powers of attorney.

Subsection (c) provides that an appointment form that contains no expiration date is valid for 11 months. This is consistent with former § 14-2-119(b). This ensures that in the normal course a new appointment will be solicited at least once every 12 months. But an appointment form may validly specify a longer period if the parties agree.

The appointment of a proxy is essentially the appointment of an agent and is revocable in accordance with the principles of agency law unless it is "coupled with an interest." See subsection (d). Thus, an appointment may be revoked either expressly or by implication, as when a shareholder later executes a second appointment form inconsistent with an earlier one, or attends the meeting in person and seeks to vote on his own behalf. Former § 14-2-119(c) provided that attendance of a shareholder at a meeting and an election to vote in person revokes a previously granted proxy. This was omitted from the Code as surplusage.

Subsection (d) deals with the irrevocable appointment of a proxy. The general test adopted is the common law test that all appointments are revocable unless they expressly provide for irrevocability and are "coupled with an interest." Subsection (d) provides considerable certainty since it describes several accepted forms of relationship as examples of "proxies coupled with an interest." These examples are not exhaustive and other arrangements may also be held to be "coupled with an interest."

Subsection (e) preserves the rule of former § 14-2-119(c) that the death or incapacity of a shareholder does not affect the corporation's right to accept a proxy unless the corporation receives prior notice. In view of the widespread dispersal of shareholders in many corporations, it is not feasible for the corporation to learn of these events independently of notice. On the other hand, subsection (e) does not affect the validity of the proxy appointment or its manner of exercise as between the proxy and the personal representatives of the decedent or incompetent. That relationship is governed by the law of agency independent of the Code.

Subsection (f) provides that an irrevocable proxy is revoked when the interest with which it was coupled is extinguished - for example, by repayment of the loan or release of the pledge.

Subsection (g) provides that a transferee for value of shares that are subject to an irrevocable appointment takes free of the appointment if (1) he did not know of the existence of the appointment and (2) the existence of the irrevocable appointment was not noted conspicuously on the certificate or information statement. Former § 14-2-119(i) provided for automatic revocation of a proxy when shares are transferred to a bona fide purchaser for value without notice.

The omission of the language of former § 14-2-119(f), which prohibits the sale of the vote, is deliberate. Older cases holding sales of votes to be against public policy are inapposite in the context of economic relationships, and that the doctrine frustrated legitimate transactions. Thus, creditors or shareholders of a particular class may find that certain contingencies in credit agreements, bond indentures or the articles of incorporation were not fully covered, and that payments to shareholders with respect to some changes are appropriate. See, Clark, Vote Buying and Corporate Law, 29 Case W. Res. L. Rev. 776 (1979) and Manne, Some Theoretical Aspects of Share Voting, 64 Colum. L. Rev. 1427 (1964).

Note to 1993 Amendment The 1993 amendment authorizes shareholders to appoint proxies using virtually any written medium, including facsimile. The amendment also authorizes a corporation to adopt optional bylaws providing for additional means by which a shareholder may appoint proxies or vote, including the authorization of oral proxies.

Note to 1997 Amendment Subsections (b), (c), (d) and (h) were amended to conform to Model Act amendments concerning facsimile transmission of proxies. The only other substantive change was authorization of execution of proxies by either a shareholder or his agent or attorney-in-fact. The 1997 amendments generally conform to the Model Act by revising subsections (c), (d) and (h) to add references to facsimile transmissions, although the Model Act contains a broader reference to "electronic transmission."

Note to 1999 Amendment Subsections (b), (c), (d) and (h) were amended to conform to recent Model Act amendments concerning the electronic transmission of proxies. The new subsection (i) is the last sentence of the former subsection (b), with the addition of the reference to electronic transmission.

This section provides that a shareholder may appoint a proxy to vote by signing an appointment form, either personally or by his agent or attorney-in-fact. The 1999 amendment authorizes shareholders to appoint a proxy by electronic transmission. An electronic transmission which appoints a proxy is deemed the equivalent of a signed appointment form if it contains or is accompanied by information from which it can be reasonably verified that the transmission was authorized by the shareholder or by the shareholder's agent or attorney-in-fact. "Electronic transmission" as used in this section means any process of communication not directly involving the physical transfer of paper that is suitable for the retention, retrieval, and reproduction of information by the recipient. See the 1999 amendment to § 14-2-140. Subsection (b) is intended to sanction the practice whereby shareholders who have been provided proxy materials with a personal identification number may electronically transmit (e.g., by touch-tone telephone or e-mail) their vote and identifying number to a person who, acting as the shareholder's agent, causes that information to be transmitted, directly or indirectly, to the inspector of election.

The appointment is effective when an appointment form or an electronic transmission (or documentary evidence thereof, including verification information) is received by the inspector of election or the officer or agent of the corporation authorized to receive and tabulate votes. The proxy has the same power to vote as that possessed by the shareholder, unless the appointment form or electronic transmission contains an express limitation on the power to vote or direction as to how to vote the shares on a particular matter, in which event the corporation must tabulate the votes in a manner consistent with that limitation or direction. See subsection (h).

Cross-References Acceptance of proxy votes, see § 14-2-724. Certificateless shares, see § 14-2-626. "Conspicuously" defined, see § 14-2-140. "Electronic transmission" defined, see § 14-2-140. "Include" defined, see § 14-2-140. Information on share certificate, see § 14-2-625. "Notice" defined, see § 14-2-141. "Secretary" defined, see § 14-2-140. "Transmitted electronically" defined, see § 14-2-140.

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity of the statutory provisions, a decision under former Code Section 14-2-119, which was repealed by Ga. L. 1988, p. 1070, § 1, effective July 1, 1989, is included in the annotations for this Code section.

Cited in Funding Sys. Leasing Corp. v. Pugh, 530 F.2d 91 (5th Cir. 1976).

RESEARCH REFERENCES

Am. Jur. 2d.

- 18A Am. Jur. 2d, Corporations, §§ 885 et seq.

- 18 C.J.S., Corporations, § 472 et seq.

- Corporation: right to reconsider vote in stockholders' or directors' meeting, 13 A.L.R. 131.

Power to require nonassenting creditors or bondholders to accept securities of, or shares in, new or reorganized corporation, 28 A.L.R. 1196; 88 A.L.R. 1238.

Revocability of proxy to vote stock, 159 A.L.R. 307.

Expenses incurred by competing factions within corporation in soliciting proxies as charge against corporation, 51 A.L.R.2d 873.

Corporations: power of inspectors of election relating to irregular or conflicting proxies, 44 A.L.R.3d 1443.

Misrepresentation in proxy solicitation - state cases, 20 A.L.R.4th 1287.