What is a proxy in corporate governance?

A proxy in corporate governance refers specifically to a document that allows a shareholder to transfer their voting rights at shareholder meetings to another individual or entity. This is a crucial mechanism for ensuring that shareholder voices are heard, especially when they cannot attend the meetings in person. By granting a proxy, shareholders can designate someone else to vote on their behalf, effectively participating in critical decisions regarding corporate matters such as board elections or significant business transactions.

This mechanism is important in corporate governance as it enhances shareholder participation and represents an essential part of the democratic process within a corporation. It allows for a broader engagement of shareholders, which can lead to more representative and accountable corporate decision-making.

The other options do not capture the essence of what a proxy is in the context of corporate governance. A stockholder’s certificate of ownership pertains to proof of ownership, an agreement to purchase additional shares relates to transactions of shares rather than voting rights, and a form of corporate tax return is unrelated to shareholder voting processes.