When running a business, a company will encounter many situations where formal decisions need to be made by shareholders or the board of directors — known as company resolutions. Where shareholders are required to make a formal decision, resolutions are traditionally passed at shareholders’ meetings, such as an Annual General Meeting (AGM) or an Extraordinary General Meeting (EGM).
An AGM is a mandatory meeting held by a company on a yearly basis to update shareholders on the company’s financial health. It must be held within 4 to 6 months of the company’s financial year end, depending on whether the company is publicly listed. During the AGM, the company presents its financial statements, shareholders can raise queries on financial performance, and shareholders vote on important decisions — such as the appointment or removal of a director, or the appointment or reappointment of an auditor for the upcoming year.
Certain events, however, require shareholders to come together on short notice to deal with an urgent business matter that can’t wait until the next AGM. To deal with such matters, an EGM may be convened. Some examples of EGM agendas include:
- Alteration of the company’s constitution
- Election of new directors or board members
- An issue that requires shareholders’ input and is too serious or urgent to wait until the next AGM
Calling of EGMs
An EGM can be called by two or more members holding not less than 10% of the total number of voting shares. Where it’s impossible to convene an EGM in the usual way — for example, if quorum requirements can’t be met, or there’s a deadlock in day-to-day management — the court also has the power to call one.
Notice
To convene an EGM, the company must give its members written notice.
An EGM, other than one called to pass a special resolution, must be called by notice in writing of not less than 14 days, or such longer period as the company’s constitution provides.
A resolution is a special resolution when it’s passed by a majority of not less than three-fourths of the members present at a general meeting, provided the intention to propose the resolution as a special resolution was specified in the notice, and that notice was given:
- Not less than 14 days in advance, for a private company; or
- Not less than 21 days in advance, for a public company.
A company can give a shorter notice period if at least 95% of members holding voting rights agree to it. The company’s constitution may also provide for a different notice period.
The notice must clearly state the date, place, and time of the EGM, along with the agenda of business matters to be discussed, and must specify members’ rights to appoint a proxy. Following amendments to Singapore’s Companies Act, a company can send meeting notices electronically — for example, by email or publication on the company’s website — provided its constitution clearly allows for such electronic transmission.
Quorum
For an EGM to be properly constituted, quorum must be met — the minimum number of members entitled to vote who must be present at the meeting. The Companies Act requires a minimum of 2 members to be present, unless the company’s constitution specifies otherwise.
Voting
The voting outcome is revealed by the end of the EGM, so it’s known whether the resolutions have passed as soon as the meeting concludes.
Additional Step for Special Resolutions
Where a special resolution is passed, the company must take one additional step: under section 186 of the Companies Act 1967, a copy of the resolution must be lodged with the Accounting and Corporate Regulatory Authority (ACRA) within 14 days of it being passed. Failing to lodge is an offence, carrying a fine and a default penalty.