A proxy can be designated to make legal decisions or provide legal assistance on behalf of someone else. There are two basic situations in which a proxy is used: to vote on behalf of a shareholder and to make health care decisions for another person. A proxy can also be given to represent someone in any situation where official representation is needed.
In many legal situations, a person is unable or unwilling to make a legal decision or provide legal assistance in person. In such situations, the person can designate someone to be their proxy. There are two basic situations in which a proxy is used. The first is when a person is entitled to one vote, such as at a meeting of shareholders, and is unable to attend or simply chooses not to attend. The other use of the term proxy is to refer to someone who has the ability to make health care decisions on behalf of another person.
When a person owns shares in a company, they are entitled to one vote at all shareholder meetings. In reality, most corporate stockholders do not attend shareholders’ meetings and therefore are not physically present to cast their vote. Investors in the stock market typically cast their proxy vote on the management company managing their stock portfolio on the assumption that a portfolio manager is qualified to cast the vote and has a financial incentive to make a good decision. A proxy vote, however, can be given to whomever the title owner chooses to designate.
Another use of the term proxy refers to the ability to make health care decisions for another person. A health care proxy, often referred to as a living will, health power of attorney, or advanced directive, gives someone the authority to make health care decisions on behalf of another person. A health care proxy is typically given to a spouse, parent, or child, although anyone can be designated. Once signed, it gives the designee the right to make decisions about medical treatment, including withholding treatment, in the event that the person executing the document is unable to do so himself.
A proxy is not limited to the right to cast a vote at a shareholders’ meeting. The term can be used in any situation where a person designates another person as their representative. A proxy may be given to a neighbor, for example, for a homeowners association annual meeting or any other meeting where a person needs official representation, such as an employee meeting.
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