diff --git a/lib/functions.sh b/lib/functions.sh
index b4e0f68d..866ca971 100644
--- a/lib/functions.sh
+++ b/lib/functions.sh
@@ -9,6 +9,15 @@ detectCompose() {
 	fi
 }
 
+# Encodes all characters not in unrestricted character set of RFC3986 Section 2.3
+urlencode() {
+  for ((i=0;i<${#1};i++)); do
+    local c=${1:i:1}
+    [[ "$c" =~ [a-zA-Z0-9._~-] ]] && printf '%s' "$c" || printf '%%%02X' "'$c"
+  done
+  echo
+}
+
 setupProxy() {
 	### Note: As the current data protection concepts do not allow communication via HTTP,
 	### we are not setting a proxy for HTTP requests.
@@ -22,10 +31,12 @@ setupProxy() {
 		HTTPS_PROXY_HOST="$(echo $hostport | sed -e 's,:.*,,g')"
 		HTTPS_PROXY_PORT="$(echo $hostport | sed -e 's,^.*:,:,g' -e 's,.*:\([0-9]*\).*,\1,g' -e 's,[^0-9],,g')"
 		if [[ ! -z "$HTTPS_PROXY_USERNAME" && ! -z "$HTTPS_PROXY_PASSWORD" ]]; then
-		    local ESCAPED_PASSWORD="$(echo $HTTPS_PROXY_PASSWORD | od -An -v -t x1 | sed -e 's/[[:space:]]//g' -e 's/\([0-9a-f][0-9a-f]\)/%\1/g' | tr -d '\n')"
+			local ESCAPED_PASSWORD="$(echo $HTTPS_PROXY_PASSWORD | od -An -v -t x1 | sed -e 's/[[:space:]]//g' -e 's/\([0-9a-f][0-9a-f]\)/%\1/g' | tr -d '\n')"
+			local CURL_ESCAPED_PW="$(urlencode $HTTPS_PROXY_PASSWORD)"
 			local proto="$(echo $HTTPS_PROXY_URL | grep :// | sed -e 's,^\(.*://\).*,\1,g')"
 			local fqdn="$(echo ${HTTPS_PROXY_URL/$proto/})"
 			HTTPS_PROXY_FULL_URL="$(echo $proto$HTTPS_PROXY_USERNAME:$ESCAPED_PASSWORD@$fqdn)"
+			CURL_HTTPS_PROXY_FULL_URL="$(echo $proto$HTTPS_PROXY_USERNAME:$CURL_ESCAPED_PW@$fqdn)"
 			https="authenticated"
 		else
 			HTTPS_PROXY_FULL_URL=$HTTPS_PROXY_URL
@@ -34,7 +45,7 @@ setupProxy() {
 	fi
 
 	log INFO "Configuring proxy servers: $http http proxy (we're not supporting unencrypted comms), $https https proxy"
-	export HTTPS_PROXY_HOST HTTPS_PROXY_PORT HTTPS_PROXY_FULL_URL
+	export HTTPS_PROXY_HOST HTTPS_PROXY_PORT HTTPS_PROXY_FULL_URL CURL_HTTPS_PROXY_FULL_URL
 }
 
 exitIfNotRoot() {
diff --git a/lib/monitoring.sh b/lib/monitoring.sh
index b5466a56..640bf9ac 100755
--- a/lib/monitoring.sh
+++ b/lib/monitoring.sh
@@ -47,8 +47,8 @@ function hc_send(){
 
     if [ -n "$2" ]; then
         MSG="$2\n\nDocker stats:\n$UPTIME"
-        echo -e "$MSG" | https_proxy=$HTTPS_PROXY_FULL_URL curl --max-time 5 -A "$USER_AGENT" -s -o /dev/null -X POST --data-binary @- "$HCURL"/"$1" || log WARN "Monitoring failed: Unable to send data to $HCURL/$1"
+        echo -e "$MSG" | https_proxy=$CURL_HTTPS_PROXY_FULL_URL curl --max-time 5 -A "$USER_AGENT" -s -o /dev/null -X POST --data-binary @- "$HCURL"/"$1" || log WARN "Monitoring failed: Unable to send data to $HCURL/$1"
     else
-        https_proxy=$HTTPS_PROXY_FULL_URL curl --max-time 5 -A "$USER_AGENT" -s -o /dev/null "$HCURL"/"$1" || log WARN "Monitoring failed: Unable to send data to $HCURL/$1"
+        https_proxy=$CURL_HTTPS_PROXY_FULL_URL curl --max-time 5 -A "$USER_AGENT" -s -o /dev/null "$HCURL"/"$1" || log WARN "Monitoring failed: Unable to send data to $HCURL/$1"
     fi
 }
diff --git a/lib/prerequisites.sh b/lib/prerequisites.sh
index 2c1e186e..945f4d02 100755
--- a/lib/prerequisites.sh
+++ b/lib/prerequisites.sh
@@ -71,7 +71,7 @@ source ${PROJECT}/vars
 
 if [ "${PROJECT}" != "minimal" ]; then
   set +e
-  SERVERTIME="$(https_proxy=$HTTPS_PROXY_FULL_URL curl -m 5 -s -I $BROKER_URL_FOR_PREREQ 2>&1 | grep -i -e '^Date: ' | sed -e 's/^Date: //i')"
+  SERVERTIME="$(https_proxy=$CURL_HTTPS_PROXY_FULL_URL curl -m 5 -s -I $BROKER_URL_FOR_PREREQ 2>&1 | grep -i -e '^Date: ' | sed -e 's/^Date: //i')"
   RET=$?
   set -e
   if [ $RET -ne 0 ]; then
diff --git a/lib/tests/test_proxyparsing.sh b/lib/tests/test_proxyparsing.sh
new file mode 100755
index 00000000..32e959aa
--- /dev/null
+++ b/lib/tests/test_proxyparsing.sh
@@ -0,0 +1,123 @@
+source ../functions.sh
+
+test_setupProxy() {
+  # simple logger for tests
+  log() { :; }
+
+  local failures=0
+  local total=0
+
+  assert_eq() {
+    local label="$1" got="$2" expected="$3"
+    total=$((total + 1))
+    if [[ "$got" != "$expected" ]]; then
+      failures=$((failures + 1))
+      printf 'FAIL: %s\n  got:      %q\n  expected: %q\n\n' "$label" "$got" "$expected"
+    else
+      printf 'ok: %s\n' "$label"
+    fi
+  }
+
+  run_case() {
+    local name="$1"
+    local url="$2"
+    local u="$3"
+    local p="$4"
+    local exp_host="$5"
+    local exp_port="$6"
+    local exp_full="$7"
+
+    HTTPS_PROXY_URL="$url"
+    HTTPS_PROXY_USERNAME="$u"
+    HTTPS_PROXY_PASSWORD="$p"
+
+    setupProxy >/dev/null 2>&1
+
+    assert_eq "$name host" "$HTTPS_PROXY_HOST" "$exp_host"
+    assert_eq "$name port" "$HTTPS_PROXY_PORT" "$exp_port"
+    assert_eq "$name full" "$HTTPS_PROXY_FULL_URL" "$exp_full"
+  }
+
+  echo "Running setupProxy tests..."
+  echo
+
+  # 1) Basic https host:port
+  run_case "basic https" \
+    "https://proxy.example.org:8443" "" "" \
+    "proxy.example.org" "8443" \
+    "https://proxy.example.org:8443"
+
+  # 2) https without port -> default 443
+  run_case "https no port" \
+    "https://proxy.example.org" "" "" \
+    "proxy.example.org" "443" \
+    "https://proxy.example.org"
+
+  # 3) no scheme, host:port -> defaults scheme=https
+  run_case "no scheme hostport" \
+    "proxy.example.org:3128" "" "" \
+    "proxy.example.org" "3128" \
+    "https://proxy.example.org:3128"
+
+  # 4) URL with path/query/fragment
+  run_case "ignores path" \
+    "https://proxy.example.org:8443/some/path?x=1#y" "" "" \
+    "proxy.example.org" "8443" \
+    "https://proxy.example.org:8443"
+
+  # 5) explicit env creds inserted
+  run_case "env creds override" \
+    "https://proxy.example.org:8443" "alice" "secret" \
+    "proxy.example.org" "8443" \
+    "https://alice:secret@proxy.example.org:8443"
+
+  # 6) embedded creds used if env creds absent
+  run_case "embedded creds" \
+    "https://bob:pw@proxy.example.org:8443" "" "" \
+    "proxy.example.org" "8443" \
+    "https://bob:pw@proxy.example.org:8443"
+
+  # 7) env creds override embedded creds
+  run_case "env overrides embedded" \
+    "https://bob:pw@proxy.example.org:8443" "alice" "secret" \
+    "proxy.example.org" "8443" \
+    "https://alice:secret@proxy.example.org:8443"
+
+  # 8) IPv6 literal with port
+  run_case "ipv6 with port" \
+    "https://[2001:db8::1]:8080" "" "" \
+    "2001:db8::1" "8080" \
+    "https://[2001:db8::1]:8080"
+
+  # 9) IPv6 literal without port -> default 443
+  run_case "ipv6 no port" \
+    "https://[2001:db8::1]" "" "" \
+    "2001:db8::1" "443" \
+    "https://[2001:db8::1]"
+
+  # 10) http scheme rejected -> outputs empty
+  HTTPS_PROXY_URL="http://proxy.example.org:8080"
+  HTTPS_PROXY_USERNAME=""
+  HTTPS_PROXY_PASSWORD=""
+  setupProxy >/dev/null 2>&1
+  assert_eq "http rejected host" "${HTTPS_PROXY_HOST:-}" ""
+  assert_eq "http rejected port" "${HTTPS_PROXY_PORT:-}" ""
+  assert_eq "http rejected full" "${HTTPS_PROXY_FULL_URL:-}" ""
+
+  # 11) empty URL -> outputs empty but no failure
+  HTTPS_PROXY_URL=""
+  setupProxy >/dev/null 2>&1
+  assert_eq "empty url host" "${HTTPS_PROXY_HOST:-}" ""
+  assert_eq "empty url port" "${HTTPS_PROXY_PORT:-}" ""
+  assert_eq "empty url full" "${HTTPS_PROXY_FULL_URL:-}" ""
+
+  echo
+  echo "Tests complete: $((total - failures))/$total passed."
+  if (( failures > 0 )); then
+    echo "Some tests failed."
+    return 1
+  fi
+  return 0
+}
+
+test_setupProxy