Used with permission from the United States Securities and Exchange Commission.
One of your key rights as a shareholder is the right to vote your shares in corporate elections. Shareholder voting rights give you the power to elect directors at annual or special meetings and make your views known to company management and directors on significant issues that may affect the value of your shares.
U.S. public companies set what is known as a “record date.” Investors who own the company’s shares on that record date have the right to vote. If you own shares of the company on the record date, the company will send you one of the following three communications:
- a notice that proxy materials are available on the Internet
- a package containing a proxy card or voting instruction form, annual report, and proxy statement
- a package containing an annual report and information statement, but no proxy card
Under state law, shareholders may vote at an annual or special meeting. However, since most people live hundreds of miles away from these meetings and are too busy to attend, the law permits shareholders to vote by “proxy” without being present in person. Most shareholders vote this way. In corporate elections, when you vote by proxy, you are authorizing someone (often members of the company's management) to vote according to your wishes as reflected on the proxy card at the meeting.
Here are some of the ways a company may allow you to vote:
- In person. You may attend the annual shareholder meeting and vote at the meeting. The materials you receive will describe what you must do to attend and vote, as well as the time, location, and date of the meeting.
- By mail. You may vote by filling out a paper proxy card if you are a registered owner or, if you are a beneficial owner, a voting instruction form.
- By phone. Most companies provide a telephone number in the proxy materials through which you can vote. You will be prompted to vote using the control number provided in your materials.
- Over the Internet. If the company offers this option, the materials will provide a website and control number for you to use to vote.
As a shareholder of a public company you may hold shares directly or indirectly:
- A registered owner or record holder holds shares directly with the company.
- A beneficial owner holds shares indirectly, through a bank or broker-dealer. Beneficial owners holding their shares at a broker-dealer or bank are sometimes said to be holding shares in “street name.” The majority of U.S investors own their securities this way.
Registered owners (or record holders) receive a proxy and cast votes directly with the company that issues the shares. Beneficial owners, on the other hand, receive a “voting instruction form” directing their brokerage firm or other financial institution how to vote their shares. The brokerage firm (or bank or custodian) casts your proxy vote with the company after receiving instructions from you.