In Portman Iron Ore Limited (ACN 007 871 892), in the matter of Golden West Resources Limited (ACN 102 622 051) [2008] FCA 1362, the Federal Court of Australia rejected an action by a shareholder in a listed public company arguing that proxy votes it collected for onforwarding to the company (rather than sent direct to the company) should not have been ruled invalid by the meeting chair. Was that valid compliance with 250B of the Corporations Act?
As a preliminary issue the Court refused to grant the relief because even if the Portman votes were counted and included, Portman would not have achieved its objectives.
But the Judge did discuss the procedure for collection of proxies: " the better course, whether or not it is compelled by the proper construction of s 250B of the Act is for completed proxies to be returned directly to the company holding the meeting at which the vote is to be exercised".
"39 In conclusion, my view on this topic is that while the Act does not expressly spell out that proxy forms are to be returned only to the company or directly to the company, the reasoning articulated in Bisan Ltd v Cellante [2002] VSC 430 at [44], reflects, with respect, a good deal of common sense."
The quote he referred to in Besan is:
The legislation does not expressly state that the nomination of an intermediate recipient will render a notice of meeting or a proxy appointment ineffective or invalid. However, in my opinion, the legislation's insistence on receipt by the company appears to contemplate a receipt by an entity managed and controlled by persons subject to onerous fiduciary duties in relation to the proxies, which will safeguard the actual and apparent integrity of the corporate voting process. The interception of proxy appointment forms by an intermediate party who is under no fiduciary duty or other apparent obligations in relation to their safeguarding, entails an inherent exposure to the possibility of filtering or other inappropriate handling. In my opinion, it could constitute a grave defect in the electoral process in respect of any contemplated meeting. In the present case, the specified recipient in both the Notices and the Proxy Forms is not a disinterested party, but in my view, the defect does not depend on that circumstance. The apparent, as well as the actual integrity of the corporate electoral process, is important.
