Can a member of an Arkansas nonprofit corporation give a proxy that directs how their vote should be cast on specific issues?

Plain-English summary

Senator Bryan King asked whether members of an Arkansas nonprofit corporation can use a "directed proxy," defined in the request as a proxy authorizing the holder to vote a specified way on specified issues. The AG answered yes under the state's default rule. A nonprofit member may appoint a proxy by signing an appointment form, unless the corporation's articles or bylaws prohibit or limit proxy voting. The member may state "any express limitation on the proxy's authority" on the face of that form.

The opinion is limited to the legal default. The AG declined to interpret the documents of the private corporation described in the request, because that would involve private legal practice. PDF footnote 1 also says the request mentioned the Horizontal Property Act and that "[t]hat act, however, does not regulate proxies." The opinion does not decide whether the named corporation's own governing documents permit a particular appointment.

The AG further explains that a proxy appointment takes effect by default when the authorized corporate agent receives the form. A corporation generally should accept an appointment but may reject it if it has a good-faith, reasonable basis to doubt the signature's validity or the signer's authority.

What this means for you

Nonprofit members

State any desired limits on the proxy's authority on the appointment form. The AG reads A.C.A. § 4-33-724(f) as allowing that direction by default. Check the organization's articles and bylaws because they may change or prohibit proxy voting. The opinion does not validate a particular form or determine how a specific corporation's rules apply.

Nonprofit boards and meeting administrators

Use the default acceptance rule and the stated grounds for rejection in A.C.A. § 4-33-727. The AG says there are limited circumstances for rejecting a proxy; doubt about signature validity or signatory authority must be reasonable and in good faith. The corporation's governing documents may alter the statutory defaults discussed in the opinion.

Residents of associations organized as nonprofits

The PDF footnote says the Horizontal Property Act does not regulate proxies. That observation does not replace review of the association's own articles and bylaws. The AG expressly refused to decide the proxy rules of the private corporation described in the request.

Common questions

What is a directed proxy in this opinion?
The requester defined it as "a proxy which authorizes the proxy holder to vote a specific way on specific issues." The AG treated that direction as a permissible express limit on proxy authority under the default statute.

When does the appointment take effect?
By default, when the authorized corporate agent receives the appointment form. The AG notes that governing documents can change default rules.

Can a nonprofit refuse to accept a proxy appointment?
The AG says it generally should accept one, but may reject it on a good-faith, reasonable basis to doubt the signature's validity or the signer's authority to sign for the member.

Does the Horizontal Property Act ban directed proxies?
The AG says in PDF footnote 1 that the Act "does not regulate proxies." He does not decide the named corporation's governing-document rules.

Did the AG settle the election dispute described in the request? No. Footnote 1 says members alleged their board had not been elected according to state law and corporate documents. The AG limited his answer to whether state law allows directed proxies by default.

Legal basis in the opinion

The AG quotes A.C.A. § 4-33-724(a): a member "may appoint a proxy to vote or otherwise act for the member by signing an appointment form" unless articles or bylaws prohibit or limit proxy voting. He quotes subsection (f)'s permission to include "any express limitation on the proxy's authority" on the form. These are the provisions he applies to directed proxies.

Source

• Official Arkansas Attorney General opinion search: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/ (Opinion No. 2024-069, September 13, 2024; official two-page PDF, including footnote 1)

Original opinion text

Opinion No. 2024-069

September 13, 2024

The Honorable Bryan B. King
State Senator
871 CR 814
Green Forest, Arkansas 72638

Dear Senator King:

I am writing in response to your request for my opinion whether Arkansas law allows the use of directed proxies by members of a nonprofit corporation. Your request defines “directed proxy” as “a proxy which authorizes the proxy holder to vote a specific way on specific issues.”1

RESPONSE

By default, Arkansas law allows members of a nonprofit corporation to vote by directed proxy. But a corporation’s governing documents may alter that default rule.

DISCUSSION

Although a nonprofit corporation’s “articles or bylaws [may] prohibit or limit proxy voting,” the default rule in Arkansas is that a member of a nonprofit corporation “may appoint a proxy to vote or otherwise act for the member by signing an appointment form.”2 Under this default rule, the member may, when completing the proxy appointment form,

1
You have also included in your request facts about a specific private, nonprofit corporation of which some members allege that the board of directors “has not been elected in accordance with State law and the governing” corporate documents. I am prohibited from engaging in the private practice of law, which precludes me from interpreting private corporate documents or determining their applicability to specific facts. See, e.g., Ark. Att’y Gen. Ops. 2012-093, 96-353 (citing A.C.A. § 25-16-701). Thus, I limit my analysis to whether directed proxies are allowed under Arkansas law, not whether they are allowed by the named corporation’s governing documents.

The request also indicates that the named corporation’s board “is to conduct business in accordance with
[the] … Horizontal Property Act.” That act, however, does not regulate proxies. 2 A.C.A. § 4-33-724(a).
The Honorable Bryan B. King
State Senator
Opinion No. 2024-069
Page 2

include “any express limitation on the proxy’s authority … on the face of the form.”3 By default, the proxy appointment is effective when the authorized corporate agent receives the appointment form.4

Under the default rules described above, it is my opinion that directed proxies are allowed by Arkansas law. I again caution, however, that corporate documents can change these rules, and I am not authorized to opine on whether specific corporate documents alter Arkansas’s default rule.

Finally, under this default rule, there are a limited number of circumstances in which a corporation may reject a proxy appointment. In general, the corporation should accept a proxy appointment.5 But if the corporation has a good-faith, “reasonable basis for doubt[ing] … the validity of the signature on [the proxy-appointment form] or about the signatory’s authority to sign for the member,” it can reject the proxy appointment.6

In sum, Arkansas law by default allows a member of a nonprofit corporation to limit a proxy’s authority when appointed, which would include a “directed proxy” as you have defined it. But a corporation’s governing documents can alter that default rule.

Deputy Attorney General Noah P. Watson prepared this opinion, which I hereby approve.

Sincerely,

TIM GRIFFIN
Attorney General

3
Id. § 4-33-724(f) (emphasis added).
4
Id. § 4-33-724(b)(1).
5
Id. § 4-33-727(a)–(b).
6
Id. § 4-33-727(c).