What is an Extraordinary General Meeting (EGM)?
An Extraordinary General Meeting (EGM) is called to address urgent issues that cannot wait until the next scheduled annual general meeting (AGM). EGMs are convened for matters including, but not limited to, mergers and acquisitions, significant changes in company policy, or any other issues that require wide-reaching consent from shareholders.
Examples
- Company Merger: When two companies plan to merge, they often need the approval of their respective shareholders. An EGM would be called to discuss and vote on the proposed merger.
- Amendments to Articles of Incorporation: If a company needs to change its articles of incorporation due to legal requirements or strategic shifts, they may convene an EGM to gain shareholder approval for these changes.
- CEO Replacement: In the unexpected event that a CEO resigns or is terminated, an EGM might be called to discuss and vote on a new candidate or interim replacement.
Frequently Asked Questions (FAQs)
Q1: Who can call an Extraordinary General Meeting? A: An EGM can be called by the board of directors, or upon the request of a certain number of shareholders as stipulated by the company’s bylaws. It could also be called by a court or government authority in special circumstances.
Q2: How much notice is required for an EGM? A: The notice period for an EGM is often shorter than for an AGM and is defined by the company’s bylaws or under relevant legal regulations. Typically, a notice period could range from 14 to 21 days.
Q3: Can all types of resolutions be passed in an EGM? A: Yes, all types of resolutions—ordinary, special, and extraordinary—can be passed in an EGM, provided they adhere to the legal and regulatory framework governing the company.
Q4: Are EGMs mandatory? A: EGMs are not mandatory as per usual company operation but become essential when significant, urgent business issues arise that require shareholder input and voting.
Q5: Can shareholders propose topics for an EGM? A: Yes. Typically, shareholders holding a certain percentage of the company’s shares can propose topics and request the board to convene an EGM to discuss these topics.
Related Terms
- Annual General Meeting (AGM): A mandatory yearly gathering of a company’s interested shareholders.
- Quorum: The minimum number of members required to be present for the meeting to be valid.
- Proxy Voting: A mechanism that allows shareholders to vote without being physically present at the meeting.
- Resolution: A formal decision made during a meeting, requiring approval from a certain percentage of shareholders.
Online References
- Investopedia - Extraordinary General Meeting (EGM): Definition
- Corporate Governance Basics
- Sec.gov - Topical Reference for Shareholder Meetings
Suggested Books for Further Studies
- “Corporate Governance” by Kenneth A. Kim, John R. Nofsinger, and Derek J. Mohr - This book provides a thorough overview of corporate governance issues, including the role of shareholder meetings.
- “The Corporate Records Handbook: Meetings, Minutes & Resolutions” by Anthony Mancuso - This handbook covers detailed instructions on recording meeting minutes and resolutions including those from EGMs.
- “Corporate Law and Governance” by Andrew Keay - A detailed text on all aspects of corporate law, including shareholder rights and the significance of different types of meetings.
Accounting Basics: “Extraordinary General Meeting (EGM)” Fundamentals Quiz
Thank you for exploring the intricacies of an Extraordinary General Meeting (EGM) with us. This guide and quiz should provide a comprehensive understanding for any corporate governance enthusiast!
