Extraordinary General Meetings (EGM)

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  • Post last modified:December 15, 2023
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An Extraordinary General Meeting (EGM) is a special meeting of a company’s shareholders that is convened for specific and exceptional purposes. Unlike the Annual General Meeting (AGM), which is held regularly each year, an EGM is called whenever there is a need to address specific issues or matters that require the approval or input of shareholders outside the normal course of business.

Key features of Extraordinary General Meetings (EGMs) include:

1. **Purpose:**
– EGMs are called to discuss and decide on specific matters that are not addressed during regular annual meetings. Common reasons for convening an EGM include major changes to the company’s capital structure, mergers and acquisitions, changes to the company’s articles of association, or other significant decisions.

2. **Authority to Convene:**
– An EGM can be convened by the board of directors, the company’s management, or upon the request of shareholders. In some cases, local regulations or the company’s articles of association may specify the procedures for convening an EGM.

3. **Notice Period:**
– Shareholders must be given notice of the EGM within a specified period before the meeting. The notice period is typically prescribed by corporate laws or regulations and may vary by jurisdiction. The notice includes details about the agenda, date, time, and venue of the meeting.

4. **Agenda:**
– The agenda of an EGM is limited to the specific matters for which the meeting was called. Shareholders can vote on resolutions related to these agenda items.

5. **Voting Rights:**
– Shareholders attending an EGM have the right to vote on the resolutions presented. Voting may occur in person or, in some cases, by proxy. The outcome of the vote determines whether the proposed resolutions are approved or rejected.

6. **Quorum:**
– A quorum is the minimum number of shareholders or shares that must be represented at the EGM for the meeting to be valid. Quorum requirements are typically defined in the company’s articles of association or bylaws.

7. **Resolutions:**
– Resolutions proposed at an EGM are decisions that require shareholder approval. These resolutions may pertain to significant corporate actions, changes in the company’s structure, or other matters that impact the shareholders’ interests.

8. **Record Keeping:**
– Minutes of the EGM are recorded, documenting the discussions, decisions, and voting outcomes. These minutes are maintained as part of the company’s official records.

9. **Regulatory Compliance:**
– EGMs must comply with relevant legal and regulatory requirements. This includes adherence to corporate governance principles, disclosure of information to shareholders, and compliance with voting procedures.

10. **Examples of EGM Agenda Items:**
– Approving a merger or acquisition.
– Changing the company’s name or articles of association.
– Authorizing an increase or reduction in share capital.
– Approving significant investments or divestitures.
– Resolving matters related to financial restructuring or insolvency.

11. **Flexibility:**
– The flexibility of an EGM allows companies to address urgent or exceptional matters promptly, seeking input and approval from shareholders as needed.

EGMs play a crucial role in the corporate governance structure by providing shareholders with a forum to make important decisions beyond the routine matters covered in AGMs. The convening of an EGM ensures that shareholders have the opportunity to express their views and exercise their voting rights on issues that have a significant impact on the company.