Companies typically have an annual general meeting, or AGM, once a year. On occasion, there is a need 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 who trade their stock publicly. The date of the AGM may change from year to year but usually no more than 15 months can pass between them. Goals of the AGM include election of directors, presentation and approval of audited accounts, and discussions of the firm’s past and future activities.
Unlike annual general meetings, extraordinary general meetings are rare. An EGM is held 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 US, this amount is half the value of its called-up share capital.
An extraordinary general meeting can be called by directors, shareholders, or auditors. To call a special general meeting, shareholders must possess a certain percentage of the voting rights. In the US, shareholders must have at least ten percent of 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 circumstance. Emergency general meetings may be called to elect a new board of directors. They may also convene to approve a rights issue or a change to the company’s articles of association.
Once an extraordinary general meeting is proposed, a notice must be sent to all existing shareholders alerting them of the meeting time, date, and location. Notices usually give 21 days or more advance notice of the meeting to allow the shareholders to plan accordingly. The notice also alerts the shareholders to the issues to be addressed at the meeting. If a shareholder is not able to make the meeting, a proxy may be assigned.
Extraordinary general meetings are usually run in a similar manner to an annual general meeting. There is a set agenda followed and a chairperson who runs the meeting. An extraordinary general meeting may be shorter than an annual general meeting depending on the cause for calling the meeting.