Extraordinary General Meetings
An Extraordinary General Meeting (EGM) refers to a shareholders' meeting convened outside the company's regular Annual General Meeting (AGM). EGMs are typically called to address urgent or special matters that need to be resolved before the next AGM. These meetings are convened by the company's board of directors, shareholders, or other authorized entities to discuss and decide on significant issues such as amendments to the company's articles of association, major asset transactions, mergers and acquisitions, changes in board members, etc.
Key characteristics include:
Ad-Hoc Nature: EGMs are not regularly scheduled meetings but are convened as needed.
Specific Agenda: Meetings focus on discussing and resolving specific urgent or significant matters.
Convening Authority: Called by the board of directors, shareholders, or other authorized entities according to the company's bylaws or legal requirements.
Legal Validity: Resolutions passed at an EGM carry the same legal weight as those passed at an AGM.
Example of an Extraordinary General Meeting application:
Suppose a publicly traded company receives a takeover bid and needs to make a decision quickly. The company's board of directors decides to convene an EGM to discuss and vote on whether to accept the takeover bid. During the meeting, shareholders listen to detailed presentations on the takeover proposal and vote on whether to approve the acquisition.
Extraordinary General Meeting
An Extraordinary General Meeting (EGM) is a shareholders' meeting convened outside the regular Annual General Meeting (AGM). EGMs are typically held to address urgent or special matters that need to be resolved before the next AGM. The meeting is called by the company's board of directors, shareholders, or other authorized entities to discuss and decide on significant issues such as amendments to the company's articles of association, major asset transactions, mergers and acquisitions, changes in board members, etc.
Origin
The concept of an Extraordinary General Meeting originated from the need for corporate governance to ensure that companies can make swift decisions when faced with urgent or significant matters. As companies grew in size and complexity, the AGM alone could not meet all decision-making needs, leading to the emergence of EGMs. Historically, the first records of EGMs date back to the late 19th century when corporate laws were being refined, and shareholders' rights and corporate governance structures were becoming more defined.
Categories and Characteristics
The main characteristics of an EGM include:
- Non-regular: An EGM is not a regular annual meeting but a temporary meeting convened as needed.
- Specific Agenda: The meeting addresses and resolves specific urgent or significant matters.
- Convening Method: The meeting is convened by the board of directors, shareholders, or other authorized entities according to the company's articles of association or legal provisions.
- Legal Effect: The resolutions passed at an EGM have legal effect, equivalent to those passed at an AGM.
Specific Cases
Case 1: Suppose a publicly traded company receives a takeover offer and needs to make a decision quickly. The board of directors decides to convene an EGM to discuss and vote on whether to accept the takeover offer. During the meeting, shareholders hear detailed explanations of the takeover proposal and vote on whether to agree to the takeover.
Case 2: A company discovers that a clause in its articles of association needs urgent amendment to comply with new legal requirements. The board of directors decides to convene an EGM to discuss and vote on the amendment. During the meeting, shareholders discuss the necessity of the amendment in detail and ultimately pass the amendment proposal.
Common Questions
Question 1: Who can convene an EGM?
Answer: An EGM is typically convened by the company's board of directors, shareholders holding a certain percentage of shares, or other authorized entities according to the company's articles of association or legal provisions.
Question 2: Do the resolutions passed at an EGM have legal effect?
Answer: Yes, the resolutions passed at an EGM have legal effect, equivalent to those passed at an AGM.
