Annual General Meeting •  Voting Instruction Form

Size of Board

The corporate charter or by-laws defines the minimum and maximum number of members that may serve on the board of directors.

Proposals dealing with the size of the board of directors ask shareholders to approve the number of individuals that may sit on the company’s board.  

The permissible size of the board is usually specified in a company’s charter or by-laws.  Most often, it is expressed as a range rather than a specific number.  For example, the company’s charter may state that the board of directors shall consist of not less than five nor more than ten individuals.  Frequently, any change in this range requires approval of the company’s shareholders.  

There are many reasons why management may seek a change in board size.  If the board is too large, its deliberations may be cumbersome and unwieldy.  On the other hand, an increase in board size may be requested in order to bring to the board qualified individuals with areas of expertise that management believes would benefit the company.  In other cases, the incumbent board may use an increase in board size as a defense against hostile takeovers by appointing additional directors who are sympathetic to the incumbents.

Elect Directors - Company Nominees

The election or re-election of members of the Board of Directors to serve either a term of one year or staggered terms of two or three years.

The company’s proxy statement will provide the nominee’s name, position with the company (if applicable), principal occupation, age, year in which the candidate first became a director of the company, board committees on which he or she serves as well as beneficial share ownership.
In most companies, directors are elected by a plurality of the company’s voting shares In the election of directors, in a single resolution or separate, and assuming a quorum is present at the meeting, shareholders may vote for the nominee or withhold their vote electing nominees by a plurality of the company’s voting shares. . This means that the director nominee with the most affirmative votes for a particular slot is elected for that slot.  Since directors generally run unopposed, the election of the board’s nominees is virtually assured.  In recent years, however, companies have introduced Majority Voting in the election of board members. Shareholders may vote FOR, AGAINST or, ABSTAIN.  
If cumulative voting is permitted, shareholders may cast all of their votes for a single individual. Candidates receiving the greatest number of votes cast by eligible holders will be elected to the board of directors.
In companies that provide for annual election of directors, the incumbent board nominates a slate of directors to serve until the next annual meeting. A classified board structure divides the board into two or three classes with each class to serve a term of two or three years. Under most such arrangements, there are three classes of directors, elected for staggered three-year terms. Thus, in any given year, only one of the three classes of directors must stand for re-election. Proponents of the classified board structure believe that a classified board assures continuity of service on the board and allows directors to acquire in-depth experience in the company’s affairs.
In some jurisdictions other than the United States or Canada, publicly listed companies will have a dual- structured board. This is a corporate system where two separate boards are used to monitor and guide a company. Under a typical dual structure the Supervisory Board, comprised usually of Independent or Outside Directors is responsible for strategy and oversight/supervision of management, while the Management or Executive Board comprised of senior executives usually appointed by the Supervisory Board, is responsible for daily management and tactical issues.

Auditors & Fix Remuneration

In a single resolution, shareholders are asked to approve the appointment of the independent auditing firm and to determine or set their fees.

In certain jurisdictions, domiciled companies are required to seek shareholder approval, as distinct from ratification, for their selection and appointment of independent auditing firms and, in some cases, deputy independent auditors. Any change of auditors and the reason for this action must be disclosed to securities regulators and shareholders.  

Companies must also seek shareholder authority for its Board of Directors to set or fix the remuneration of its auditors.

Transact Other Business

Other business covers items that are not on the official agenda of a shareholder meeting but could occur.

Prior to any shareholders meeting, shareholders must be provided with an agenda indicating the items to be voted on at the meeting.  Many companies, after enumerating the issues to be considered, will add a catch-all provision to the agenda that would allow the meeting to “transact any other business.”  In some cases, shareholders are asked to vote on that provision, that is, to approve or disapprove it; while in the majority of cases, no vote is requested, and the provision appears merely as notice that other matters may be considered and voted upon.  

Most authorities believe that these clauses do not give management carte blanche to ambush shareholders with measures that they would never have approved had they known they would be voted upon at the meeting.  Rather, the “other business” provision, if used at all, could allow management to remedy technical defects in the items considered without the necessity of convening another meeting of shareholders.