What is an Extraordinary General Meeting - EGM
An extraordinary general meeting (EGM), also called a special general meeting or emergency general meeting, is a meeting other than a company’s annual general meeting (AGM) that regularly occurs among a company's shareholders, executives and any other members. In contrast, an EGM is usually called on short notice and deals with an urgent matter, often concerning company management.
BREAKING DOWN Extraordinary General Meeting - EGM
In most cases, the only time shareholders and executives meet is during a company’s annual general meeting, which usually occurs at a fixed time. However, certain events may require shareholders to come together to solve a certain problem, such as the removal of an executive. Another key difference between an annual general meeting and an extraordinary general meeting is that an AGM can only be held during business hours and not on a national holiday, while an EGM can be carried out on any day, including a national holiday.
If an AGM is not called within this stipulated time frame a financial penalty can be imposed, while no penalty exists for an EGM meeting outside of business hours. While an AGM can only be called by the company’s board, an EGM can also be called by the Board on the requisition of shareholders, requisitionist, or tribunal.
Example of an Extraordinary General Meeting
Extraordinary general meetings occur frequently for a variety of reasons, often surrounding the potential removal of an executive. In December 2017, the London Stock Exchange (LSE) held an extraordinary general meeting, regarding claims that its Chairman, Donald Brydon, pushed out of former chief executive Xavier Rolet. Rolet stepped down early in November 2017.
Although some EGMs occur outside of normal business hours, LSE’s recent EGM took place on a non-holiday Tuesday. The motion was sparked by activist investor The Children’s Investment Fund Management (TCI); TCI received 20.9% votes in favor of Brydon’s removal. The ultimate result of the EGM was that Brydon remained in his position. Additional major shareholders, who opposed the motion, included Blackrock, Qatar Investment Authority (QIA), and Institutional Shareholder Services (ISS).