Extraordinary general meetings (EGM) are special shareholder meetings that are conducted to make a decision regarding urgent and important company matters that need to be resolved immediately. These are meetings that are conducted outside of the company’s regular meeting schedule to address issues that can no longer be postponed until the next annual general meeting (AGM), which only occurs once a year.
Reasons for Calling an Extraordinary General Meeting
The following are examples of crucial company matters that may constitute the holding of an EGM:
- Special Resolutions: Special resolutions are a type of company resolution passed by shareholders regarding urgent decisions. Because of the severity of the matter, these will often require a much higher majority vote of 75% than the usual 50%. Some examples include amendments to the company’s constitution or articles of association and the authorization of capital expenditures, among other things.
- Shareholder Initiatives: A shareholder or group of shareholders can also call for an EGM to discuss certain issues should they have a high enough percentage of company shares. Some examples of possible matters include the proposal to revise the company’s policies on corporate governance, environmental impact, and executive compensation.
- Regulatory Requirements: Companies may have to hold EGMs in compliance with certain laws and regulations. Issues may include legal matters, the approval of a major transaction, large company changes like mergers or acquisitions, the appointment or removal of high-ranking personnel, the issuance of new shares, and other similar topics that can’t wait until the next AGM.
The Importance of Extraordinary General Meetings
The main reason why EGMs are important is because they keep shareholders up-to-date and involved in the operations, activities, and future of the company. Aside from that, EGMs also:
- Include shareholders in the decision-making process for major company changes
- Update shareholders regarding certain matters that will affect the company’s trajectory
- Allow shareholders to protect both their and the company’s interests
- Allow important stakeholders to voice their concerns and insights
- Keep shareholders informed of the company’s current situation and circumstances
How to Hold an Extraordinary General Meeting
There are a few steps that need to be taken to conduct a successful extraordinary general meeting:
- Written Notice: Companies will have to give their shareholders written notice, with private companies having a minimum notice period of 14 days and public companies having a minimum notice period of 21 days. This notice must contain certain information regarding the proposed EGM to help members decide whether they’ll attend or not. Should the company want to hold an EGM with a shorter notice period, it must acquire at least 95% of the shareholders’ total voting rights to be implemented.
- Disseminating the Notice: Once the written notice has been finalized with all the relevant information, it can now be sent out to the shareholders. This can either be done through registered mail, or electronic channels and mediums such as email or a post on the company’s official website.
- Meeting Proper: This meeting will follow the agenda indicated in the written notice, and the voting outcome will often be revealed at the end. During the meeting, the resolutions can also be approved, rejected, or revised by the shareholders. It’s also crucial that the minutes of the meeting are properly recorded, as these serve as documentation of the meeting’s proceedings.
- After the Meeting: In certain circumstances, such as the winding down of a company, a copy of the special resolution will have to be submitted to the Accounting and Corporate Regulatory Authority (ACRA) within seven days.
The Requirements of an Extraordinary General Meeting
The two main requirements of an extraordinary general meeting are a written notice and a quorum.
Written Notice
The written notice should provide the following information:
- Topic or matter of the EGM
- Proposed resolutions
- Background or context of the topic or matter
- Agenda of the meeting
- Date and time of the meeting
- Location of the meeting
- Name of the person who called for the meeting
- Instructions for shareholders and corporations should they want to send a proxy in their place to represent their vote
Quorum
A certain number of shareholders and members have to be present at the EGM for it to push through, with this quorum often being specified in the company’s constitution. In cases where the minimum quorum is not mentioned in the constitution, the Companies Act of Singapore has set a default minimum of two people.
Who Can Call for an Extraordinary General Meeting
A few groups have the authority to call for an EGM:
- Board of directors
- A shareholder or group of shareholders that holds a total of at least 10% of the company’s voting rights
- Court (should there be any disputes within the company that require legal intervention)
Frequently Asked Questions
What’s the Difference Between EGM and AGM?
As mentioned above, EGMs are called for urgent matters that need to be resolved immediately, while AGMs are mandatory company meetings that are only held once a year to discuss certain prescribed matters such as financial performance and the appointment of higher positions.
What’s the Difference Between EGM and OM?
Compared to EGMs, ordinary meetings are routine company meetings that cover day-to-day matters regarding the company’s regular business operations, like strategic initiatives, performance reports, and more.
The Takeaway
Extraordinary general meetings are shareholder meetings outside of the company’s usual annual general meetings. These meetings cover a wide range of urgent and time-sensitive matters and need to meet certain requirements to be considered valid.