Must know basics of Extraordinary General Meeting (EGM)
The only time shareholders and managers meet would be during the annual general meeting of a corporation, which usually takes place at a set date and time. It is conceivable to describe an Extraordinary General Meeting (EGM) as a shareholder meeting that is not an annual general meeting (AGM). It takes place when there is an immediate problem with the company or some crisis situation and needs the feedback of all senior management and the Board.
What are the matters concerning EGM?
To deal with any of the following, an EGM may be called:
- The termination of an administrator.
- A lawful matter.
- Any problem that can’t wait till the next meeting of shareholders.
Difference between EGM and AGM
A distinction between the Annual General Meeting and the Extraordinary General Meeting is that it is only possible to hold an Annual General Meeting during regular working hours and not on a national holiday, while an EGM can take place on any day, including holidays.
Furthermore, although the Board of a corporation can only call an AGM, the Board can also call an EGM on the request of shareholders, requisitionists, or tribunals.
Who can call for an EGM?
It is permissible for those representatives with a substantial stake in the organization to call for an EGM.
- In the case of a corporation with a share capital, the members holding not less than one-tenth of the company’s paid-up capital are entitled to vote in respect of that matter, as at the date of filing of the requisition.
- In the case of a corporation with no share capital, the members possess not less than one-tenth of the entire voting power as at the date of the requisition deposit in respect of that matter.
- EGM demanded by the Board:
The Board has a maximum of 21 days to call for an EGM upon receipt of a valid request. The EGM must then be held 45 days from the date the EGM is named.
- EGM demanded by the requisitionists:
If the Board does not call for an EGM, the requisitionists themselves will call for it within a span of 3 months from the day on which the request was deposited. If the EGM is held during this specified span of 3 months, it may be rescheduled to any day after three months in the future.
Essentials of a Valid Requisition:
The basics of a legitimate request are described as follows:
- Specify the problem for which the meeting is organized.
- Signature of the requisitionists.
- To be deposited at the registered office of the company.
Terms for holding an EGM:
The representatives must be granted a 21-day notice period. There is an exception to this law, however. If 95% of the voting members approve, the EGM can be held on a shorter notice.
Necessary Quorum for EGM:
The following number of members is necessary for a quorum unless the company’s articles state otherwise.
- In the case of a public company: the personal participation of five members.
- In the case of every other company: the personal involvement of two representatives.