.png)
Definition:
An Extraordinary General Meeting (EGM) is a meeting of a company's shareholders that is called at a time other than the company's annual general meeting. The purpose of an EGM is typically to discuss and vote on specific matters that require immediate attention or that cannot wait until the next annual general meeting. Examples of issues that may be discussed at an EGM include changes to the company's articles of association, approval of major transactions, election or removal of directors, and certain financial matters. The board of directors may call an EGM or it may be requested by a significant number of shareholders. An EGM must be announced to shareholders in advance according to the company's articles of association and legal requirements.
An Extraordinary General Meeting (EGM) is a crucial event for the Board of Directors (BoD) of any company. It is a gathering of shareholders that takes place outside the usual annual general meeting cycle. During an EGM, important matters such as major changes to the company's articles of association, merger or acquisition proposals, and other significant decisions are discussed and voted upon. In this article, we will explore in detail what an EGM is, its purpose and importance, and the key differences between an EGM and an Ordinary General Meeting (OGM).
As briefly mentioned above, an EGM is an important gathering of shareholders that takes place outside the company's usual annual general meeting cycle. It is an event where major decisions that affect the company and its shareholders are discussed and voted upon. An EGM can be called upon by the board of directors or shareholders with specific voting rights.
The purpose of an EGM is to discuss and approve the company's strategic decisions and major changes that cannot wait for the next annual general meeting. The process is essential for decision-making as it provides the BoD with the opportunity to discuss and approve key matters that affect the company's future.
The importance of an EGM cannot be overstated. As previously mentioned, the discussions and decisions made during the event have a significant impact on the company, its shareholders, and stakeholders. Major decisions, such as merger and acquisition proposals, changing the company's articles of association, and discussing strategic changes that affect the direction of the organization, are debated and approved. It is, therefore, essential for BoD members to attend the meeting and take part in the decision-making process.
An Ordinary General Meeting (OGM) is a company's annual gathering of shareholders, where they discuss the company's financial reports and important matters relating to the organization.
However, there are some key differences between an OGM and an EGM. Firstly, an EGM is not an annual gathering but rather an extraordinary gathering called upon to discuss and approve key matters that cannot wait until the next annual general meeting.
Secondly, the matters discussed during an EGM are often of higher importance than those discussed during an OGM. OGMs typically deal with routine business, such as electing directors and approving financial reports. An EGM, on the other hand, deals with more critical issues such as changing the company's articles of association, approving mergers and acquisitions, and making strategic changes that affect the direction of the company's future.
The BoD has various responsibilities and duties when preparing for an EGM. They must ensure that accurate and reliable financial information is provided to shareholders to make informed decisions. Additionally, they must prepare the company's proposals and draft the agenda for the meeting, and ensure that all relevant parties are notified in a timely manner of the event.
The BoD must communicate with shareholders, making sure that all necessary information about the EGM is available to them. This also includes providing the rules and procedures for the event and the relevant deadlines for submitting any proposals and supporting documents.
There are specific legal requirements that must be met when conducting an EGM for the BoD. The notice inviting shareholders to attend the meeting and vote on the relevant resolutions must be sent in accordance with legal requirements. The board must ensure that the meeting is properly convened, that the meeting procedures for voting are adhered to, and that the minutes of the meeting are accurately recorded.
The stakeholders and shareholders must be provided with adequate and timely information to make informed decisions. Any material information that directly or indirectly affects the price and value of the company's securities must also be disclosed on time, accurately, and completely.
The BoD must understand the rules and procedures required when conducting an EGM. These include determining the necessary quorum, the procedure for nominating candidates, voting rules and procedures, and the method of appointing proxy holders, among others. The board must also ensure that the meeting is conducted in compliance with the company's articles of association or bylaws, and relevant corporate statutes and regulations.
The agenda and proposals for an EGM are some of the most critical documents required for the meeting. The board must ensure that the agenda is exhaustively prepared and that it covers all the essential topics that shareholders need to discuss. It is necessary to send the agenda and proposals to shareholders with sufficient time before the EGM, so they have adequate time to review and prepare.
The board must draft the proposals accurately and without ambiguity, so that shareholders clearly understand the implications of any decision they make. The proposals must also be in compliance with the company's articles of association, relevant corporate statutes and regulations, and other legal requirements.
It is crucial to notify shareholders and other stakeholders of the EGM, along with the agenda, proposal and supporting documents. The notice should be provided in a timely manner and should include all relevant information regarding the event. It must also state the quorum requirements, the voting procedure, and any deadline for submitting proxies or other supporting documents.
During an EGM, proceedings dictate that voting procedures should be conducted in accordance with the company's articles of association, relevant corporate statutes and regulations, and other legal requirements
The board must ensure that the voting procedure is fair, transparent, and that it includes all relevant stakeholders. They must determine the voting procedure beforehand, such as whether voting will be done electronically or by a show of hands. The decision-making process must be carefully recorded, and the minutes of the meeting should accurately reflect the events and decisions made during the EGM.
Overall, an EGM is a critical event for the BoD. It is an opportunity to discuss and vote on important matters that affect the company's future, shareholders, and other stakeholders. The board must prepare thoroughly for the event, ensuring compliance with legal requirements, stakeholder communication, and a proper conduct of the voting process. By doing so, the company and its shareholders can make informed decisions that assist with securing a brighter future for all stakeholders.
