Extraordinary General Meeting

Most shareholder decisions happen at the AGM, but when something important cannot wait, directors or shareholders can call an EGM. An extraordinary general meeting, often called an EGM, is a shareholder meeting outside the regular annual meeting; some laws call it simply a general meeting, though businesses still use EGM to distinguish it from the AGM.

It lets eligible shareholders consider a resolution before the next yearly meeting, but a board discussion is not the same as a properly called shareholder vote. First decide whether the proposed action needs shareholder approval at all, since the company's constitution, shareholder agreements and law assign different decisions to directors and members.

Amending articles, approving certain capital changes or considering a major transaction may require particular resolutions, but do not assume every asset sale needs an EGM. A legal adviser should identify the entity, jurisdiction, decision and voting threshold before the company announces a meeting.

The notice should say when, where and how the meeting occurs, identify the resolutions and include the information shareholders need to vote, and some laws require the exact text and designation of a special resolution. The required notice period, permitted electronic attendance and proxy rights vary.

An urgent commercial closing is not itself an exemption from notice, so check whether the applicable law permits an agreed shorter notice or a written resolution instead. A quorum is the minimum eligible participation needed for a valid meeting under applicable rules, and it is distinct from the majority needed to pass a resolution.

If too few members attend or are represented, no vote can fix the missing quorum merely by obtaining a high percentage of votes present. Check the share register and voting rights, not just how many people enter the room.

The voting threshold depends on the resolution, and as a UK illustration the Companies Act 2006 describes a special resolution as requiring at least 75% of votes cast at a meeting under its stated rules. If 800,000 qualifying votes are cast and the rule applies, 600,000 affirmative votes reach 75%.

That is not a universal EGM threshold, because ordinary resolutions can differ and laws and constitutional provisions elsewhere may impose their own rules, so also check whether abstentions affect the denominator. Members can sometimes require the directors to convene a meeting, for example under section 303 of the UK Companies Act 2006, which specifies a threshold for a member request; the board should verify any request under current law and the company's governing documents rather than dismissing it because management dislikes the proposal, although an informal message from a single investor does not call a binding meeting.

Once held, the meeting needs a record of attendance, quorum, resolutions, voting method and result, so keep minutes and supporting notices, proxies and voting records, and remember that some resolutions must be filed with a registry afterward. A passed vote is only one step if closing also depends on regulator consent, investor documents or filings, so owners should assign a person to track these follow-through items and a real entity must always follow its own governing law.