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Annual general meetings (AGMs) are required by law in many countries for publicly traded companies, while extraordinary general meetings (EGMs) are called when an issue arises that cannot wait until the next AGM. EGMs are rare and can be called by directors, shareholders, or auditors, and the purpose of the meeting depends on the circumstances. Notices must be sent to all shareholders in advance, and EGMs generally follow a set agenda and are led by a chairperson.
Companies typically have an annual general meeting, or AGM, once a year. Sometimes it is necessary to have another meeting outside of the annual general meeting. An extraordinary general meeting, called an EGM, is any meeting held by a company other than the annual general meeting.
Annual general meetings are required by law in many countries for companies that trade their shares publicly. The date of the AGM can change from year to year, but generally no more than 15 months can pass between them. The objectives of the AGM include the election of directors, presentation and approval of audited accounts, and discussions of the company’s past and future activities.
Unlike annual general meetings, extraordinary general meetings are rare. An EGM is performed when an issue arises that is too pressing to wait until the next AGM to address. Extraordinary general meetings, sometimes called emergency general meetings or special general meetings, are required by law in some countries if a company’s net assets fall below a certain point. In the United States, this amount is half the value of your requested capital stock.
Directors, shareholders or auditors can call an extraordinary general meeting. To call a special general meeting, shareholders must own a certain percentage of the voting rights. In the United States, shareholders must have at least ten percent of the voting rights to call an EGM. Departing auditors also have the ability to call an extraordinary general meeting, but this is extremely rare.
The purpose of an extraordinary general meeting depends on the circumstances. Emergency general meetings may be called to elect a new board of directors. They may also meet to approve a rights issue or a change in the company’s bylaws.
Once an extraordinary general meeting is proposed, a notice must be sent to all existing shareholders to alert them to the time, date and place of the meeting. Notices generally give 21 days or more in advance of the meeting to allow shareholders to plan accordingly. The notice also alerts shareholders to the issues that will be addressed at the meeting. If a shareholder cannot make the meeting, they can be assigned a proxy.
Extraordinary general meetings are generally held in a manner similar to an annual general meeting. It follows a set agenda and a chairperson who leads the meeting. An extraordinary general meeting may be shorter than an annual general meeting, depending on the reason for the call.
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