In many legal situations, a person is unable or unavailable to make a legal decision or give legal input in person. In those situations, the person may designate someone as his or her proxy. There are two basic situations in which a proxy is used. The first is when a person is entitled to a vote, such as at a shareholder meeting, and is unable to attend or simply chooses not to attend. The other use of the term proxy is to refer to someone who has the ability to make healthcare decisions on behalf of another person.
When a person owns stock in a company, he or she is entitled to a vote at all shareholder meetings. In reality, most owners of corporate stock do not attend shareholder meetings and therefore are not physically present to cast a vote. Investors in the stock market typically give their proxy vote to the management company that manages their stock portfolio under the assumption that a portfolio manager is qualified to cast the vote and has a financial incentive to make a good decision. A proxy vote, however, may be given to anyone that the owner of the stock chooses to designate.
Another use of the term proxy refers to the ability to make healthcare decisions for another person. A healthcare proxy, often referred to as a living will, healthcare power of attorney, or an advanced directive gives someone the authority to make healthcare decisions on behalf of another person. A healthcare proxy is typically given to a spouse, parent, or child, although anyone may be designated. Once signed, it gives the designee the right to make decisions regarding medical treatment, including refusal of treatment, in the event the person executing the document is unable to do so for himself or herself.
A proxy is not limited to the right to cast a vote at a shareholder meeting. The term can be used in any situation where a person designates another person to be his or her representative. A proxy may be given to a neighbor, for example, for an annual meeting of a homeowner's association, or for any other meeting where a person needs official representation, such as an employee meeting.