What is an Extraordinary General Meeting?
An extraordinary general meeting (EGM) is a company shareholder meeting that takes place outside the scheduled annual general meeting (AGM). EGMs, also known as special or emergency meetings, are convened to address urgent issues that cannot wait until the next AGM.
Key Takeaways
- An EGM is a shareholder meeting held outside the usual annual schedule.
- EGMs address urgent matters arising between annual shareholder meetings.
- They are often used for emergency measures like legal disputes or executive changes.
Why Extraordinary General Meetings Are Essential
Unlike routine AGMs, EGMs can be called to expedite the resolution of pressing matters. These could range from removing an executive to sorting out urgent legal issues. The flexibility of calling for an EGM allows companies to react promptly to unforeseen challenges, ensuring that important decisions or actions are not delayed.
Most significantly, EGMs have unique procedural elements: while AGMs must be held during standard business hours and cannot occur on national holidays, EGMs can be conducted on any day, including holidays. Beyond this, while only a company’s board can summon an AGM, an EGM can also be requested by shareholders, a requisitionist, or a tribunal.
Scenarios That Necessitate an EGM
Situations that may lead to the calling of an EGM include but are not limited to:
- The removal of an executive or board member
- Urgent legal matters or litigation
- A critical issue that needs immediate resolution and cannot wait until the next AGM
Real-World Example: London Stock Exchange
In December 2017, the London Stock Exchange (LSE) convened an extraordinary general meeting to address allegations that its chair, Donald Brydon, had forcibly removed former CEO Xavier Rolet. The meeting was prompted after Rolet’s premature resignation sparked by The Children’s Investment Fund Management gathering 20.9% of votes favoring Brydon’s removal. The EGM, conducted on a regular business day, ultimately resulted in Brydon retaining his position.
Differentiaiting AGM from EGM
Annual General Meeting (AGM)
Annual General Meetings are obligatory yearly assemblies where shareholders discuss and vote on company matters such as board appointments, executive compensation, dividend issuance, and auditor selection. The jurisprudence around AGMs varies, with stricter regulations for publicly traded entities, which must file proxy statements with the Securities and Exchange Commission (SEC), detailing the upcoming meeting’s particulars such as date, time, location, and agenda items.
In summary, while AGMs serve as the structured, annual review and decision-making platform, EGMs provide the necessary flexibility to address exigencies promptly. Both types of meetings are integral to robust corporate governance and enable timely, strategic decision-making to guide companies through both anticipated and unexpected challenges.
Related Terms: Annual General Meeting, company governance, shareholder voting, corporate management.
References
- London Stock Exchange Group. “London Stock Exchange Group plc Result of General Meeting”.
- U.S. Securities and Exchange Commission. “Proxy Statements: How to Find”.
