Inspectors of Election

Inspectors of Election play a crucial role in ensuring the integrity of voting processes at annual meetings of public companies, as mandated by state charters or bylaws. Traditionally, many companies have relied on their transfer agents for this function, but a growing trend over the past five years is the increasing preference for completely independent inspectors. This shift is driven by a desire for a reliable check-and-balance system, particularly as proxy tabulators, often distinct from transfer agents, are involved.

While some companies still use their own employees, retirees, or individuals from external legal and accounting firms, this practice is diminishing. Anecdotal instances, such as using a priest, nun, rabbi, and AME minister, are charming but underscore the need for individuals with expertise in proxies and an understanding of the evolving complexities in “proxy plumbing systems” and the court-tested “rules of proxies.”

Certain companies continue the practice of entrusting proxy solicitors with the certification of the final vote, potentially introducing conflicts of interest. However, these old traditions are rapidly changing for valid reasons. With proxy matters often hanging by a thread, the Inspector’s ability to pass a ‘sniff test’ regarding independence, know-how, and thorough due diligence is becoming increasingly critical. It’s time for a reevaluation.

Recommendations include considering expert and genuinely independent Inspectors, especially in cases of close or contentious matters or when significant decisions like mergers, recapitalizations, or bylaw changes requiring shareholder approval are at stake. It’s essential to ensure that selected inspectors have well-defined, written procedures that they consistently follow. Moreover, these inspectors should be capable of standing up effectively if their credibility is challenged.

For further insights, numerous articles about Inspectors of Election are available on our website.

Listings: Inspectors of Election

If you think you may have matters on your shareholder meeting ballot where the outcomes could turn out to be close or contentious…

If investors are voting on one or more “material items” – like a merger, recapitalization or a bylaw change that requires shareholder approval…

If you simply want to follow “best practices” when it comes to ‘inspecting the election’ and certifying the final results…

If you want to be sure that any firm or individual inspector that you and your board appoint has rigorous procedures in place – and actually follows them – and that the inspector(s) can stand up and be effectively counted themselves if challenged…

Please think about having one or more expert and truly independent Inspectors as a part of your company’s official shareholder meeting team.

Please visit our website to review some “Questions and Answers about Inspectors of Election”… “What, Exactly Should Inspectors Be Inspecting?”… “Who’s Counting Those Votes, Madam Chairman?”…and to review the profiles of our current team of Inspectors.

Ron Schneider

Ron Schneider

Director, Corporate Governance Services

We provide inspector-of-election services and final vote certification, as well as on-site support for any needs that may arise during your meeting from quorum monitoring to in-person voting. You can rely on us to determine that ballots were properly cast, and announce the results at the appropriate time.

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