One of the jobs of an inspector of election is to determine the validity and effect of proxies. See, e.g., Cal. Corp. Code § 707(b) and 8 Del. Code § 231(b)(2). However, the validity and effect of proxies will depend upon state law. I’m guessing that many people assume that the law of the state of incorporation governs proxies. However, I’m not so sure that this assumption is accurate in all cases.

A Proxy Is An Agency Relationship

A proxy is evidence of an underlying agency relationship pursuant to which a shareholder grants the recipient (aka “proxy holder”) the power to vote at a meeting. See Cal. Corp. Code § 178 and Moran v. Household Int’l, Inc., 500 A.2d 1346, 1355 (Del. 1985). Under Section 291 of the Restatement (Second) of the Conflicts of Laws, the rights and duties of a principal and agent are determined by the local law which, with respect to the particular issue, has the most significant relationship to the parties and the transaction.