A company with many shareholders is obligated to have an AGM, that is, Annual General Meeting. During this AGM, the company shareholders and the company heads decide upon the company’s matters that need to be discussed at least once a year, like distributing profits, funds required for growth, the company’s performance, and much more.
But, when there is any matter in the company that requires urgent attention of the shareholders, the EGM is held. EGM or Extraordinary General Meeting or Emergency General Meeting is a meeting that is not pre-scheduled but is organized in case of an emergency. The purpose of the extraordinary general meeting is the agenda, which could be anything that was not planned, like a legal matter. As AGMs are held once a year, EGMs can be held many times between two AGMs, depending upon the severity of the matter.
What Is an EGM?
EGM or Extraordinary General Meeting represents any company shareholders meeting other than its scheduled annual meeting. Usually, this is an emergency meeting and an unscheduled meeting of a company’s members.
Although all the shareholders meeting with the company executives and heads only once a year, at the time of an AGM, to be briefed about how the company business is going and discuss some simple annual matters, some urgent matters can call for an emergency meeting of shareholders on concise notice, that requires their attention. The matters are mostly related to crucial management decisions and cannot be made without the shareholders’ input.
Some of these crucial management decisions could be related to some legal matters, any situation or decision that cannot be delayed till the next AGM, or to decide upon the removal of a company executive.
Difference Between AGM and EGM – AGM vs. EGM
The difference between an annual and an extraordinary general meeting is urgent, and who can call for these meetings. An AGM is generally organized and scheduled by the company board, while the board can schedule an EGM on the shareholders’ demand.
Also, the company tribunals have the right to call for an EGM. One more difference is the time at which they are held or scheduled. While an AGM is organized only during business hours and the working days only, that means, not after the working hours or on national holidays; the EGM can be scheduled on any day, even if it’s a holiday.
What Is AGM?
AGM or Annual General Meeting is a meeting that is to be held once every year on a scheduled date and time, only working hours. The purpose of this meeting is to present all its shareholders, the records of the company’s achievements and performances and discuss its plans and policies for the upcoming year.
All the shareholders need to attend this meeting to get information about how their invested company is working. Apart from these report readings, certain decisions need to be made by the shareholders. These decisions could be about the compensation to the executives, dividends to be paid, the appointment of a company CEO, board of directors, or an auditor, deciding upon the company’s general reserve, and many more. The shareholder’s voting usually makes these decisions. Note that not all shareholders have the right to vote. So, only those who have the privilege can vote.
The AGM is compulsory for all private and public companies. However, the rules and regulations for organizing an AGM depend on jurisdiction to jurisdiction or state to state. Though, in most cases, it is observed to be a little strict in public companies. All publicly-traded companies are obligated to submit an annual proxy statement with the SEC (Securities and Exchange Commission). This statement must have the following details about the AGM clearly mentioned:
- Date of the AGM
- Time of commencement of the AGM
- The venue where AGM is to be held
- Executive Compensation
- Decisions or matters that require shareholders voting
An EGM is an emergency meeting scheduled for any emergency in a company that requires its shareholders’ attention. It is extremely different from the AGM in terms of matters, time, and schedule. Also, an AGM is bound to happen once a year, but an EGM may or may not happen for years if no such situation arises. Also, conducting an EGM can be very difficult because, unlike AGM, it is scheduled on short notice, and it can get troublesome to get a quorum.