What it means
Most companies hold an Annual General Meeting (AGM) once a year to approve the accounts, elect directors and deal with routine business. An EGM covers everything else that cannot wait.
It is "extraordinary" only in the sense that it falls outside the usual calendar. The board of directors can call an EGM, and in many countries shareholders holding a set percentage of the shares can demand one.
Notice must be given in advance, with a clear agenda so that investors know what they are voting on. Company law and the company's own articles of association (its internal rulebook) set the details.
Common reasons for an EGM include approving a takeover, issuing a large amount of new shares, changing the company name, selling a major asset or replacing the chairman. Because these decisions can change who controls the business, they usually need a higher level of approval than ordinary matters.
Some resolutions need a simple majority, while others require a supermajority such as 75% of the votes cast. For finance teams, an EGM brings practical work.
They prepare supporting documents, such as valuations or pro forma accounts, and make sure the figures shown to shareholders are accurate. They may also coordinate with legal advisors and the company secretary to meet disclosure deadlines.
A nuance is that the term is more common in the UK, Europe, Asia and the Middle East than in the United States, where the equivalent is usually called a special meeting of shareholders. Whatever the name, the purpose is the same: to give owners a voice on matters that cannot wait.
Shareholders who cannot attend can usually vote by proxy, which means appointing another person to vote on their behalf. Many companies now allow online participation, which can raise turnout and lower costs.
Results are normally announced to the market soon after the meeting, because the outcome can affect the share price.
In practice
Real-world examples.
Example
A listed retailer receives a takeover offer and the board calls an EGM so that shareholders can vote on whether to accept it. The resolution passes with 82% of the votes cast, comfortably above the 75% threshold needed. The board then formally recommends the offer to the bidder and sets a completion date.
Example
A group of investors holding 12% of a private technology company's shares formally requests an EGM. They want to remove a director whom they believe has mismanaged the budget. The board must call the meeting within the period set by law, and the investors publish their reasons in advance.
Example
A family-owned manufacturing company needs to raise $5,000,000 by issuing new shares. Its articles require shareholder approval, so it holds an EGM and obtains the required consent within three weeks. Several family members vote by proxy, and the resolution is recorded in the company's minutes.
Case study
Seen in the real world.
Silverbrook Holdings is an illustrative, fictional company that discovered it needed to sell its logistics division to repay debt. The deal was worth $40,000,000, which was large enough to require shareholder approval under its articles.
The board sent notice of an EGM four weeks ahead, along with a circular explaining the price, the reasons for the sale and an independent valuation. Several large investors asked about the use of the proceeds, and the finance director presented a plan to cut debt by $30,000,000.
The resolution passed, and the sale completed shortly afterwards. The illustrative lesson is that clear information and early engagement make an EGM a smooth step rather than a source of conflict. After the vote, the company announced the result to the market and filed the resolution with the registrar, as required. The finance director then updated the cash forecast to reflect the expected sale proceeds and the planned repayment of debt, and presented the revised plan to the board the following month.
Watch out
Common mistakes.
- Assuming an EGM can be called with no notice, when company law and the articles require a minimum notice period.
- Thinking only the board can call one, when shareholders with a qualifying stake can often require it.
- Confusing an EGM with an AGM, which is the regular yearly meeting for routine matters.
Questions
People also ask.
What is the difference between an AGM and an EGM?
An AGM is held every year for routine business, whereas an EGM is called only when a specific important matter needs shareholder approval.
Who can call an EGM?
The board of directors can, and in many places shareholders who hold a minimum percentage of the shares can also demand one.
What does it cost?
The costs include legal advice, document preparation, printing or online platforms, and management time, which can be significant for a large listed company.
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