We often hear the terms “proxy” and “ballot” used interchangeably. The documents are not one and the same, and Associations should take care to treat them differently.
A proxy is a document executed by an owner that grants to another person the owner’s right to vote on a given matter in the Association. Generally, an individual who cannot attend a meeting will grant a proxy to another person who will attend the meeting. This helps to ensure that the Association reaches quorum and is able to transact business, and allows the absent party to have a vote in the matters at hand.
Proxies may be “general” or “directed.” A directed proxy does just what it says – it directs the person holding the proxy as to how he or she should vote for the proxy giver. A general proxy simply grants the right to vote to the proxy holder, and does not specify how that vote must be cast.
A written ballot differs from a proxy because while a proxy is evidence of an individual assigning his right to vote, the written ballot is the actual vote itself. When an Association takes an action by written ballot, it should accept no proxies as ballots – proxies should be exchanged for ballots. The individual owners receive the ballots, either in the mail or through some other process, and return the ballots as required by the Association (and specified on the ballots). If an individual cannot attend the meeting, he can send his ballot to the Association, or even have a friend bring the ballot to the meeting. This procedure should be dictated by the language of the ballot.
Certain actions taken by written ballot are governed by the Colorado Revised Nonprofit Corporation Act. These specific written ballots cannot be revoked and must contain the following:
- Each proposed action, with the opportunity to vote for or against the action;
- The number of responses needed to reach the quorum requirement;
- The percentage of approvals necessary for each matter (excluding director election);
- The time when the ballot must be received to be counted; and
- Information sufficient to permit the person casting the ballot to make an informed decision on the matter.
The written ballot responses must equal or exceed the Association’s quorum requirements for the action to be taken, in order for it to be effective. Thus, an election for the Board of Directors must have sufficient response to reach quorum.
For most associations, the difference between a proxy and a written ballot is a fine technical point. However, because the Colorado Revised Nonprofit Corporation Act can impose specific and different requirements for action taken by written ballot, associations should take care to not confuse a directed proxy with a written ballot, and potentially expose itself to liability.