A proxy is a written power of attorney that allows the holder of voting privileges to transfer those privileges to a third party. Proxies are most commonly used by shareholders who do not expect to be physically present at a shareholders' meeting. Instead, they fill out a standard proxy form, so that a third party who will be present at the meeting can vote in accordance with shareholder directions. The use of proxies is especially important when a non-controlling party wants to accumulate sufficient shareholder votes to gain control over a company's board of directors in a hostile takeover attempt.
Depending on the authorization granted, a proxy document may only allow a third party to vote once, on a specific issue. The proxy usually directs the recipient to vote in accordance with the specific direction of the holder of the voting rights.