Extraordinary General Meeting (EGM): Definition, Examples, and AGM

What Is an Extraordinary General Meeting (EGM)?

An extraordinary general meeting (EGM) is convened to address pressing issues that cannot wait for the annual general meeting (AGM). These meetings may involve decisions like removing an executive or resolving urgent legal matters. While AGMs occur at pre-scheduled times, EGMs can be called at any moment, even during non-business hours or holidays, reflecting their urgent nature.

How EGMs Operate and Their Importance

In most cases, the only time shareholders and executives meet is during a company’s annual general meeting, which usually occurs at a fixed date and time.

However, certain events may require shareholders to come together on short notice to deal with an urgent matter, often concerning company management. The extraordinary general meeting is used as a way to meet and deal with urgent matters that arise in between the annual shareholders’ meetings.

An EGM might be called for the following reasons:

• The removal of an executive
• A legal matter
• Any matter that can’t wait until the next shareholders meeting

Unlike AGMs, which must occur during business hours and not on holidays, EGMs can be held any day, including holidays. Also, while only a company’s board can call an AGM, an EGM can be requested by shareholders, a requisitionist, or tribunal.

Case Study: London Stock Exchange’s December 2017 EGM

EGMs can occur for various reasons, but they are often called to consider removing an executive. In December 2017, the London Stock Exchange (LSE) held an extraordinary general meeting regarding claims that its chair, Donald Brydon, pushed out former chief executive Xavier Rolet. Rolet stepped down early in November 2017.

Although some EGMs occur outside of normal business hours, the London Stock Exchange’s EGM took place on a non-holiday Tuesday. The motion was sparked by activist investor, The Children’s Investment Fund Management (TCI), which had received 20.9% votes in favor of removing Brydon. However, the result of the EGM was that Brydon remained in his position.

Contrasting EGMs With Annual General Meetings (AGMs)

An annual general meeting (AGM) is a required yearly meeting for a company’s shareholders. At an AGM, company directors present a report to shareholders on the company’s performance and strategy.

Shareholders with voting rights decide on issues like board appointments, executive pay, dividends, and auditor selection. AGM rules vary by jurisdiction. Many state incorporation laws require both public and private companies to hold AGMs, with stricter rules for public companies. 

Public companies must file annual proxy statements, known as Form DEF 14A, with the Securities and Exchange Commission (SEC). The filing will specify the date, time, and location of the annual meeting, as well as executive compensation and any material matters of the company concerning shareholder voting and nominated directors.

The Bottom Line

An Extraordinary General Meeting (EGM) is a vital tool for handling urgent issues that cannot wait for the Annual General Meeting (AGM). EGMs may address critical matters like executive removal or legal challenges. Unlike AGMs, which follow strict timing rules, EGMs offer flexibility and can be called at any time, even during holidays. Understanding the distinct roles and regulations of AGMs and EGMs helps stakeholders effectively navigate corporate governance and make informed decisions during pressing circumstances.