Extraordinary General Meeting (EGM) - Corporate Finance ...

An Extraordinary General Meeting (EGM) is a meeting held by a company to deliberate upon matters that require the urgent attention of senior executives, the ... ExtraordinaryGeneralMeeting(EGM)Ameetingheldbyacompanytodeliberateuponmattersthatrequiretheurgentattentionofseniorexecutives,theboardofdirectors,andallshareholdersHome›Resources›Knowledge›Finance›ExtraordinaryGeneralMeeting(EGM)WhatisanExtraordinaryGeneralMeeting(EGM)?AnExtraordinaryGeneralMeeting(EGM)isameetingheldbyacompanyoranorganizationtodeliberateuponmattersthatrequiretheurgentattentionofseniorexecutives,theboardofdirectorsBoardofDirectorsAboardofdirectorsisapanelofpeopleelectedtorepresentshareholders.Everypubliccompanyisrequiredtoinstallaboardofdirectors.,andallshareholdersandcannotbedeferreduntilthenextscheduledannualgeneralmeeting.TheEGMisconvenedatanirregulartimetoaddressacrisis.  AllmatterstransactedatanEGMaredeemedspecial.Forexample,theremovalofatopexecutivemightconstitutetheagendaofanextraordinarygeneralmeeting.AnEGMisalsocalledaspecial/emergencygeneralmeeting. SummaryAn ExtraordinaryGeneralMeeting(EGM)isameetingheldbyacompanytodeliberateuponmattersthatrequiretheurgentattentionofseniorexecutives,theboardofdirectors,andallshareholdersandcannotbedeferredtillthenextscheduledannualgeneralmeeting.AccordingtotheIndianCompaniesAct,2013,anEGMcanbeconvenedbytheboardaswellasbyspecificmembers/shareholdersofthecompanythatfulfillscertaincriteria.Usually,theEGMisconductedbythechairmanwhoreadsouttheresolutions,addressesthequestionsandconcernsofthemembers,overseesthevoting,anddeclarestheresults. CallinganEGMAccordingtotheIndianCompaniesActof2013,anextraordinarygeneralmeetingcanbeconvenedbyspecificmembers/shareholdersShareholderAshareholdercanbeaperson,company,ororganizationthatholdsstock(s)inagivencompany.Ashareholdermustownaminimumofoneshareinacompany’sstockormutualfundtomakethemapartialowner.orgroupsofmembersofacompanythatfulfillsthecriterialistedbelow: 1.IfthecompanyhasasharecapitalOnlythemembersthathold10%ofthecompany’spaid-upcapitalormorecancallanEGM.Theymustcarryvotingrightsregardingtheagendaonthedateofsubmittingtherequest. 2.IfthecompanydoesnothaveasharecapitalAnEGMcanbecalledbythemembersthatholdatleast10%ofthetotalvotingpowerofallthememberswhohave arighttovoteonthematteronthedateofsubmittingtherequest. ArequisitionforanEGMbythemembersisconsideredtobevalidifclearlystatesthespecificissueforcallingthemeeting,isdulysignedbythemembers,andissubmittedatthecompany’sregisteredoffice.Uponthesubmissionofavalidrequest,theboardofdirectorsofthecompanymustcallforanextraordinarygeneralmeetingwithinthreeweeks.Incasetheboardfailstodoso,thememberscanthemselvescalltheEGMwithinthreemonthsofdepositingtherequest.AnEGMmeetingthecriteriacanbeadjournedtoafuturedateaswell. ProcedureofanEGMBeforecallinganEGM,theboardofdirectorsfinalizestheresolutionstobedeliberatedbymembersand/orshareholdersinthemeeting.Themembersaretobeinformedoftheresolutionsandtheirimportancewellinadvancesothattheycanresearchthematterandeffectivelyexpresstheiropinionsandconcernsinthemeeting.Unlessotherwisestatedinthecompany’sbylaws,atleastfivemembersmustbepersonallypresentinanEGMincaseofapubliccompanyPublicCompaniesPubliccompaniesareentitiesthattradetheirstocksonthepublicexchangemarket.Investorscanbecomeshareholdersinapubliccompanybypurchasingsharesofthecompany'sstock.Thecompanyisconsideredpublicsinceanyinterestedinvestorcanpurchasesharesofthecompanyinthepublicexchangetobecomeequityowners.,andatleasttwoincaseofanyothercompany.Usually,theEGMisconductedbythechairmanwhoreadsouttheresolutions.Theboard,expectedtopossessathoroughknowledgeofthesituation,appraisesthemembersofthebenefitsoftheresolutionandaddressestheirquestions.Votesarecastbythemembersintheinterestoftheshareholdersandthecompany,andtheresultisdeclared.MemberswhoareunabletoattendtheEGMmaydelegatetheirvotingpowertoanothermember,knownasa“proxy.”TherulesregardingproxyvotesProxyVoteAProxyVoteisadelegationofvotingauthoritytoarepresentativeonbehalfoftheoriginalvote-holder.ThepartywhoreceivestheauthoritytovoteisknownastheProxyandtheoriginalvote-holderisknownasthePrincipal.Theconceptisimportantinfinancialmarketsandparticularlywithpubliccompaniesvaryfromoneorganizationtoanother. AnnualGeneralMeeting(AGM)vs. ExtraordinaryGeneralMeeting(EGM)AnAGMmustbeheldbythecompanywithinninemonthsoftheendofeveryfinancialyeartodiscussvariousbusinessmatterswiththemembers,whileanEGMhasnosuchrequirement.AnEGMcanbecalledonlyforaspecialagendaorasituationofcrisisrequiringurgentattentionofthemembers,whileanAGMcanbecalledforordinaryorspecialbusiness.AnEGMcanbeheldatanationalholidayandoutsideofbusinesshours,whichisnotthecasewithanAGM.AnAGMcanonlybeconvenedbytheboardofdirectorsofacompany,whileanEGMcanadditionallybecalledontherequestofthemembersasdetailedabove. AdditionalResourcesCFIistheofficialprovideroftheCommercialBanking&CreditAnalyst(CBCA)™ProgramPage-CBCAGetCFI'sCBCA™certificationandbecomeaCommercialBanking&CreditAnalyst.Enrollandadvanceyourcareerwithourcertificationprogramsandcourses.certificationprogram,designedtotransformanyoneintoaworld-classfinancialanalyst.Inordertohelpyoubecomeaworld-classfinancialanalystandadvanceyourcareerto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