Legislation
Rules

 
Part 16, IR16 - Proxies and Corporate Representation

This topic was dealt with by a common part in the Insolvency Rules 1986 (Part 8), but there are important changes in the new Part 16, which will apply in relation to both physical meetings (if such a meeting is requested by the necessary threshold of creditors) and virtual meetings.

A proxy may be either "specific" or "continuing". A specific proxy relates to a specific meeting. A continuing proxy relates to all meetings in the case (but does not apply as a general appointment across cases). A continuing proxy cannot contain voting instructions, but can be superseded by a specific proxy for a particular meeting. A specific proxy can contain voting instructions, but does not need to do so. It is important not to confuse these new terms with the long-standing colloquial terminology of special proxy (with voting instructions) and general proxy (no voting instructions). If a continuing proxy appoints the chair to be the proxyholder, then it will apply in relation to the chair of each meeting.

The Rules require the issue of a "blank proxy" with a notice of a meeting. This must not have inserted in it the name or description of any person as proxy-holder or instructions as to how a person appointed as proxy-holder is to act. This is not the same as 1986 rule 8.2(1) which stated that a proxy sent out with the notice must not have inserted in it the name or description of any person. The new Rules do not prohibit the issue of a proxy containing a proposed resolution such as "That Fred Bloggs be appointed liquidator", or listing the names of creditors who have expressed a willingness to be appointed to a committee. It is the name of the proxy-holder that cannot be pre-inserted.

The rule regarding the prohibition of discretionary voting in relation to a financial interest is expanded. The reference to "remuneration" becomes "remuneration, fees or expenses". The prohibition on voting oneself (or an associate) into a position to receive remuneration is supplemented by a prohibition on voting to fix or change the basis or amount of remuneration etc. This makes no difference to current practice, but clarifies beyond any possible doubt that the prohibition is not merely against voting oneself into office.

Rule 16.8 allows a company to attend a meeting of creditors in an IVA or bankruptcy by representative, rather than by proxy, should it choose to do so. This has long been the case in company insolvency (codified in S434B Insolvency Act 1986) and for a company to attend a company meeting as a member of another company (s323 Companies Act 2006), but was absent from the legislation for no apparent reason in relation to meetings of creditors in personal insolvency.

April 2017

 

 

Ben LuxfordBen Luxford
Head of Technical
020 7566 4218
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