Extraordinary General Meetings (EGM)
Candlefocus EditorThe purpose of an extraordinary general meeting can range from minor decisions such as approving the issue of bonus shares to potentially deal-breaking matters such as the dismissal of board members or senior managers. EGMs are also used to start the process of a company buyback or acquisition, or to extend the tenure of a board director.
Shareholders must be given proper notice of any EGM, allowing them sufficient time to consider the matter at hand and express their opinion at the meeting. The rules surrounding how much advance notice should be given depend on the local national laws, but it is usually from 7 to 21 days.
Typically, the shareholders of a company will approve most changes or decisions presented at the EGM with a majority vote. No other type of decision making is necessary for an EGM, as the purpose of an EGM is to quickly deliver a decision that must be taken in the short term. The decision made at the EGM becomes absolute and binding as soon as the required majority is obtained.
EGMs are valuable tools for keeping management and shareholders in line in making company decisions. They are especially important for public companies, where boards of directors and officers have a fiduciary duty to shareholders, who must be informed and consulted on most major decisions. Ultimately, EGMs help defend the rights of shareholders, ensuring that the company’s decisions are always made fairly and transparently.