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Lesson 5 of 6 · 12 min
The shareholder voting process: proposals, record date and proxy votes
A shareholder vote is a timed chain: proposals are collected and vetted, a proxy statement goes out through custodians, holders as of the record date instruct their votes before a deadline, and a tabulator counts them.
In short
- Shareholders vote at the annual general meeting or a special meeting on management proposals (directors, executive pay, dividends, auditor) and on shareholder proposals.
- A shareholder proposal asks or requires the company or board to take a specific action; in the US it must arrive at least 120 days before the meeting materials are released.
- The proxy statement sets out all proposals, the agenda, voting rules and deadlines, candidate credentials and the board's recommendation with management's reasoning on every item.
- Shares are usually held by a custodian for the beneficial owner; the custodian keeps the records with the securities depository and passes the materials on.
- Only holders as of the record date (often 30+ days before the meeting) may vote: a seller after that date still votes, a buyer after it does not.
- Votes go through a voting service before a deadline that is earlier for proxy votes than for voting in person; a tabulator or registrar counts them.
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