An Extraordinary General Meeting or EGM, is a meeting of members of the shareholders of a company when applied to a corporate setting, occurring at an irregular time. The term is used when shareholders hold a meeting to resolve an issue that too serious or urgent to wait until the next AGM. Therefore, an EGM, can be defined simply as a meeting of shareholders which is not an Annual General Meeting (AGM). On occasion, an EGM may also be referred as a special general meeting or an emergency general meeting. In light of the COVID-19 pandemic, the term Virtual Special (General) Meeting has grown in usage and popularity.
The issue to be resolved will require the contribution of the entire shareholder base and the input of all senior executives and the Board Naturally, they must be informed of the purpose of the EGM with sufficient explanatory materials.
Background Information
As the situation unfolds, the board of directors agrees upon the resolution(s) to be put to the shareholders for approval. This is sent to the shareholders clearly stating its importance. It is vital to understand that as the board has better knowledge of the situation, the resolutions will often echo their own best interests which may not be in the interests of individual shareholders. In the case of a hostile takeover for example, the board may recommend against accepting a deal whereas clearly the shareholders would be better off financially. This may or may not be at odds with the recomendation of a Proxy advisory service.
In addition to voting on a proposed merger or acquisition, an EGM might also be called to deal with the following
- The removal of an executive
- A legal matter
- Any matter that can’t wait until the next shareholders meeting
EGM’s can be carried out on any day including holidays and may be called by not only the board but also by the board on the requisition of shareholders.
Extraordinary General Meeting Example
The following screenshot is taken from a DEFM14A filing made by Pattern Energy Group (PEGI) on February 4, 2020.
You are cordially invited to attend a special meeting of stockholders of Pattern Energy Group Inc. … to be held on Tuesday, March 10, 2020, at 8:00 a.m., Pacific Time, at the corporate office of Pattern at 1088 Sansome Street, San Francisco, California 94111. … At the special meeting, you will be asked to consider and vote upon a proposal to adopt the Agreement and Plan of MergerIt is vitally important the trader reviews this information and casts their vote accordingly. Instructions for completing this action are given towards the end of the document. Should the stockholders vote in favor of the deal, it is common for the deal to be consummated in the following days assuming all regulatory clearances have been obtained.
