Definition
An Extraordinary General Meeting (EGM) is any meeting of company members that is not an Annual General Meeting (AGM). Under the Companies Act 2006, directors typically have the authority to call an EGM whenever they deem it necessary. Moreover, members who hold at least 10% of the company’s voting shares have the statutory right to requisition an EGM. Additionally, a resigning auditor may also convene an EGM under certain conditions.
Requirements:
- Notice: Adequate notice must be provided to all eligible participants in hard-copy form, electronic form, or via a company’s website.
- Purpose: EGMs are generally convened to discuss urgent matters that cannot wait until the next AGM.
Examples
- Corporate Restructuring: A company facing a significant restructuring might call an EGM to get shareholder approval for the proposed changes.
- Mergers and Acquisitions (M&A): An EGM might be convened to approve a major merger or acquisition that requires shareholder consent.
- Auditor Resignation: If an auditor resigns, they can requisition an EGM to explain the reasons for their resignation to the shareholders.
- Legal Disputes: Shareholders might call an EGM to discuss and vote on critical legal actions affecting the company.
Frequently Asked Questions (FAQs)
What distinguishes an EGM from an AGM?
While AGMs are regular, scheduled meetings held annually to discuss routine business, EGMs are special meetings convened to address urgent issues that arise between AGMs.
Who can requisition an EGM?
Shareholders holding at least 10% of the voting shares, company directors, and, in some cases, a resigning auditor can requisition an EGM.
How much notice is required for an EGM?
The Companies Act 2006 requires that adequate notice, which is generally at least 14 days, be given in hard-copy form, electronic form, or via a website, depending on the company’s articles of association.
Under what circumstances can an EGM be called?
An EGM can be called for various critical matters like corporate restructuring, M&A approvals, voting on bylaw amendments, or to address significant legal issues.
Can decisions made at an EGM be contested?
Yes, like other corporate resolutions, decisions made at an EGM can be contested in court if there are grounds to believe they were made unlawfully or violated shareholder rights.
Related Terms
- Annual General Meeting (AGM): Routine meeting of shareholders held annually to review the company’s performance, elect directors, and approve financial statements.
- Written Resolution: A resolution agreed in writing by the shareholders, eliminating the need for a meeting.
- Corporation Law: A body of law governing the rights, relations, and conduct of persons, companies, and organizations.
- Proxy Voting: A method that allows shareholders to vote on corporate matters without being physically present at the meeting.
Online References
Suggested Books for Further Studies
- “Company Law” by Alan Dignam and John Lowry
- “Principles of Corporate Finance” by Richard A. Brealey, Stewart C. Myers, and Franklin Allen
- “Corporate Governance and Accountability” by Jill Solomon
- “The Law Officer’s Handbook - Company Law” by Ewan McIntyre
Accounting Basics: “Extraordinary General Meeting (EGM)” Fundamentals Quiz
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