Virtual meetings may be your decision procedure of choice in which case you will have to be familiar with the new proxies, blank, specific and general, and how they are to be used.
Proxies. Insolvency Rules (IR) 16.1 – 16.9.
Insolvency practitioners are very familiar with proxies, documents that are used to enable one person to represent another, or to represent a legal person such as a limited company. The principle of representation by proxy will not change after the Insolvency Rules 2016 become effective on 6 April 2017 but the way in which proxies are used and the names by which different types of proxy will be known certainly will change.
Proxies will be needed at both virtual and physical meetings. Even though physical meetings will be few and far between after 6 April 2017 you may decide to hold virtual meetings as part of your decision procedures and you will need proxies for this.
IR1.2(2) states that ‘meeting’ means either a virtual or physical meeting unless the contrary intention is given and IR15.8(3) (l) states that information about proxy representation must be given with the notice of a meeting.
Proxy representation at virtual meetings makes practical sense as the definition of virtual meetings under IR15.5(1) means that people taking part in the meeting can communicate with each other even though they are not physically together. Proxy representation would be necessary for this, although the new legislation does not give guidance about how it would be possible to check that the correct person was in attendance at a virtual meeting.
Blank proxies. IR16.3.
At the time that a proxy is sent to members or creditors, including the name of the company or person subject to the insolvency procedure and the date and time of the decision procedure, it is a blank proxy under IR16.3. A blank proxy should also advise whether it is a ‘continuing’ or a ‘specific’ proxy.
Definitions of ‘continuing’ and ‘specific’ are given below but as this information is to be given on the blank proxies it is for the convener, not the person who completes the proxy, to decide whether continuing or specific proxies are to be used. In the event that there is not a statement on a proxy advising what type of proxy it is the proxy will be a specific proxy – specific proxy is effectively the default. IR16.2(4).
Specific proxies. IR16.2(3).
A specific proxy may only be used for one, defined virtual or physical meeting. A specific proxy must either:-
Direct the proxy holder how to vote by giving specific instructions (currently a special proxy),
Authorise the proxy holder to vote without specific instructions (currently a general proxy) or,
Give instructions and authorisation for different decisions at the meeting concerned.
It can be seen that the third option effectively includes aspects of both the current special and general proxies and this is likely to result in more complex proxy forms than those currently in use.
Continuing proxies. IR16.2(2) & 16.2(4).
A continuing proxy is one that can be used for all meetings during the course of the named insolvency process that start after the continuing proxy is received. This is a new concept and it may be useful to have proxies at the start of an insolvency process that can be used throughout the appointment. It could result in more certainty and fewer problems in engaging with creditors.
A continuing proxy can however only authorise the proxy holder to vote as she/he sees fit, under IR16.5, and it cannot give specific instructions how to vote. This seems to mean that a continuing proxy can only be what is now called a general proxy. Continuing (or general) proxies where the chairman is the proxy holder may be useful but if a major creditor sends a continuing proxy in the name of (say) its managing director or another insolvency practitioner, this would have other implications.
The RMSCS index to the Insolvency Rules 2016 could help with the process of learning the structure of the new Rules and how to find the information you need. These updates are also published on the RMCSC website shortly after they are sent out so you can refer to them at any time.
More information and explanations about the Insolvency Rules 2016 together with other insolvency legislation, regulation and best practice is given in version 5 of the RMCSC Insolvency Guidelines that will be launched in the near future.
Caroline Clark’s insolvency career started over 30 years ago and since 1994 she has specialised in insolvency compliance and regulation.