Extraordinary General Meeting
When running a business, a company will encounter many situations where formal decisions need to be made by either shareholders or board of directors. This is also known as company resolution. Where shareholders are required to make a formal decision, the resolutions are traditionally passed at shareholders’ meetings, e.g. Annual General Meeting (AGM), Extraordinary General Meeting (EGM).
An AGM is a mandatory meeting held by a company on a yearly basis to update its shareholders on the financial health of the company. An AGM must be held within 4 to 6 months of the company’s financial year end, depending on whether the company is publicly listed or not.
During the AGM, the company will present its financial statements to the shareholders and the shareholders are free to raise queries on the financial performance of the company. The shareholders will also be provided with the opportunity to vote on important decisions for the company e.g. appointment or removal of a director, appointment or reappointment of an auditor for the upcoming year etc.
However, certain events may require shareholders to come together on short notice to deal with an urgent business matter. To deal with such matters which require shareholders’ approval in between AGMs, 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 arises that requires the input of the shareholders and is too serious or urgent to wait until the next AGM
Calling of EGMs
An EGM can be called for by two or more members holding not less than 10% of the total number of voting shares. In situations where it is impossible to convene an EGM (e.g. the inability to meet quorum requirements, deadlock in day to day management, etc.), the court also has the power to call for an EGM.
To convene an EGM, the company is obliged to give written notice of the EGM to its members.
An EGM, other than a meeting for the passing of a special resolution, shall be called by notice in writing of not less than 14 days or such longer period as is provided in the constitution.
A resolution shall be a special resolution when it has been passed by a majority of not less than three-fourths of such members at a general meeting of which -
- in the case of a private company, not less than 14 days’ written notice; or
- in the case of a public company, not less than 21 days’ written notice,
specifying the intention to propose the resolution as a special resolution has been duly given.
A company can give a shorter notice period for its meeting if at least 95% of members who hold voting rights agree to it. In addition, it should be noted that the company’s constitution may provide for a different notice period.
In the notice, the date, place and time of the EGM should be clearly stated. The notice should also contain the agenda of the EGM to inform members of the business matters to be discussed at the meeting. In addition, the notice should specify the rights of members to appoint proxy.
With the amendments to the Companies Act in Singapore, a company can send notices of meeting electronically via emails or publication on the company’s website etc., provided that the company’s constitution clearly stipulated the use of such electronic transmissions.
In order for the EGM to be properly constituted, the quorum must be met. The quorum refers to the minimum number of members entitled to vote who must be present during the meeting. The Companies Act require a minimum of 2 members to be present at the meeting unless the company’s constitution specify otherwise.
The voting outcome will be revealed by the end of the EGM. As such, it would be known whether or not the resolutions have been passed when the EGM concludes.
For special resolutions, company will need to take an additional step i.e. a copy of the special resolution must be lodged with the Accounting and Corporate Regulatory Authority (ACRA) within 7 days.