In some legal systems, irrevocable replacements are recognized in different circumstances. In New York, for example, the courts have upheld such substitutes if they are accompanied by a commitment. They are also recognized when the irrevocable proxy is granted in return for credits, or when the objective is to retain control of the company or maintain a corporate policy. The agent represents the master and his actions are carried out as actions of the principle. However, in most proxy agreements, the principle retains some kind of control, depending on how the agent performs, and has the right to revoke the agent`s powers. One of the cases in which the court considers that irrevocable agents are not enforceable is where the proxy has an proprietary interest in the organization. For example, the agent may have lent money to the company or be an existing employee. However, under Delaware statute, an agent may be made irrevocable, whether the agent has a personal interest in the company or in his action. Irrevocable deputies are based on the same ideology as revocable deputies. Both types of substitutes are based on an agent-principle agreement, in which the contracting entity gives the agent the power to act on their behalf during the voting and decision-making process. The appointment of an agent risks the client that the agent will have unpredictable (and potentially undesirable) transactions with third parties as long as the agent retains the power of attorney. A shareholder may transfer his or her right to vote to another person through a transparent trust contract.
An agent is created by a written trust agreement in which the original shareholder transfers his shares to an agent who will be held in his or her favour. The purpose of this scheme is to control the vote of the shares and to authorize the agent to choose the shares. The original shareholder retains a favourable interest in the action and, as a general rule, the trust agreement requires that all dividends and distributions be paid to fair owners. The vote on trust contracts may require the agent to vote specifically on certain issues. Section 6.251 of the Code of Economic Organizations provides that the irrevocable proxy is represented in the case of detention vs. The company`s CEO and a majority shareholder in the company encouraged a son to become president and COO of the company. The father transferred a block of controlling shares to the son in exchange for the granting of an irrevocable representative for life to choose the action. If the agent representing the client is involved in the organization, it means that his actions can have a significant impact on the company`s decisions.