EGM: What is it, and what happens at one?
An extraordinary general meeting (EGM) is a meeting of shareholders that is called by the board of directors of a public company for a specific purpose, such as to approve or reject a proposed merger, to appoint or remove a director, or to pass a resolution calling for an election of directors. Let’s see some more information about the EGM.
Who can call an extraordinary general meeting?
If you have a corporation with more than 100 members, an extraordinary general meeting (EGM) can be called by any member who has the majority of voting rights. If there are less than 100 members, an EGM can only be called by the corporation’s majority shareholder. The purpose of an EGM is to allow shareholders to vote on whether or not to approve or reject a business plan, appoint directors, or take other actions that would affect the corporation’s operations.
An extraordinary general meeting (EGM) can also be called by a shareholder who has at least 25% ownership of the company.
When an EGM is called, all registered shareholders are sent notice of the meeting and have 10 days to vote on online ballots. If more than half of the shareholders vote in favour of the proposal, it is automatically approved. If not, then a second, more formal vote must be held.
Purpose of an extraordinary general meeting
Generally, an EGM must be called for a purpose listed in the company’s articles of incorporation. The most common reasons for calling an EGM are to appoint new directors, to consider and vote on proposals to dissolve the company or to approve a merger.
Another purpose of an EGM is to allow shareholders the opportunity to express their concerns and have them addressed by the company’s directors. If a quorum is present, shareholders may also elect or appoint directors to their boards.
What Qualifies as a Valid extraordinary general meeting?
When a company needs to call an extraordinary general meeting (EGM), they need to follow certain requirements in order for the meeting to be considered valid. Generally speaking, any meeting that is called by the board of directors or a majority of shareholders, who have signed a notice of meeting, will be considered an EGM. However, there are a few exceptions to this rule, such as meetings called for the purpose of nominating directors or exercising rights under shareholder agreements.
Steps of Holding an extraordinary general meeting
In order to hold an EGM, the company must follow certain steps. These include preparing and circulating a notice of meeting, setting the agenda, holding the meeting, and recording the vote.
So, an EGM is an important tool that shareholders can use to hold their company’s management accountable. By attending the meeting and voting on resolutions, shareholders can express their concerns and ensure that the company is being run in the best interests of its owners. If you are a shareholder, be sure to attend your company’s next EGM and make your voice heard!