An Extraordinary General Meeting (EGM) is a shareholder’s meeting called in any case of emergency or general issues, and usually prepared by the company secretary. This is different from the Annual General Meeting (AGM).
An EGM is held to discuss urgent matters that came up during the AGM and are often considered for any emergency measures.
For any companies registered in Malaysia, AGM is a mandatory requirement, while EGM is only held when necessary. More differences between both types of meetings will be discussed in this article.
Difference between Extraordinary General Meeting (EGM) and Annual General Meeting (AGM)
An AGM is a compulsory meeting among the company’s stakeholders and shareholders. At an AGM, various reports are presented by the directors of the company to its shareholders. Such reports include:
During the AGM, shareholders with voting rights will be required to vote on the current issues such as appointments of new board of directors, compensations, dividend payment amount, etc.
There are some noticeable differences between an EGM and an AGM. Not just in Malaysia, these differences apply to all companies worldwide.
|Extraordinary General Meetings||Annual General Meetings|
|Is it compulsory?||No||Yes, it is held annually|
|What is discussed?||Special business matters directly concerning company’s management||Ordinary business matters and special business matters.
Reports include annual reports consisting various financial performance reports containing information regarding the company’s performance and strategy are presented.
|Regulatory||No rules or regulations that must be complied||The initial AGM held by a company in Malaysia must be held within the first 18 months of the incorporation date of the company.
Failure to comply will result in result in penalties.
|When can it held?||Anytime||On any day except public holidays|
|Who can call the meetings?||If the company does not have share capital, two or more members can call for EGM only if they collectively own at least 10% of all voting rights||Two or more members who collectively owns at least 10% of the company’s share capital when combined|
Why Hold an Extraordinary General Meeting (EGM) in Malaysia?
An EGM occurs for various reasons and one of them includes the potential removal of one of the executives of a company. This might be due to the company receiving claims that the chairperson or another executive of the company abusing their position, forcefully removing another executive without valid reasons.
After sufficient evidence and support have been received by various stakeholders on whether the chairperson’s actions are to be valid or invalid, the EGM is held to decide whether he should remain in that position or be removed for misconduct.
How to Request for an Extraordinary General Meeting (EGM) in Malaysia?
An official request must be made by company shareholders and directors who either possess sufficient portion of the company’s share capital or voting rights before an EGM in Malaysia can be held. Once it is confirmed that the EGM will be held, members of the company’s board of director are to provide notice others about the details of the EGM.
The request should contain details about the objective of the proposed EGM and it is to be submitted in a form of a document that has been signed by all relevant personnel that wish to conduct the EGM. Once the request is made, the directors will decide if the EGM will be carried on or denied.
It should be noted that no directorial decision of a company can be made without the existence of a director.
The members/shareholders of a company can call for an extraordinary general meeting. However, only certain members with a significant stake in the company are allowed to call for an EGM.
The members who made the decision to call of the EGM, as well as the directors of the company, are at liberty to select those who are to be present at the EGM. There may be as many or as few employees selected as desire. Therefore, it might be possible that every employee of a company is to attend an EGM; however, such an occurrence is extremely rare.
The cancellation of an EGM can sometimes be difficult; however, it is not impossible by any means. A resolution passed at a meeting of the company’s board of directors which states that an extraordinary general meeting will be held may be canceled or rescinded at any time. However, it may not be canceled during the same meeting in which it is passed.
Should any other resolution be passed during a meeting of the company’s board of directors for any reason other than the holding of an EGM which the directors subsequently believe ought to be canceled, rescinded, or amended, an EGM must be held. Such an EGM may not be canceled if the directors intend to proceed with the cancellation, rescinding, or amending of the resolution in question. If any official forms related to the resolution in question have already been filed with important authorities; for example, the Companies Commission of Malaysia (SSM) or Malaysia’s Ministry of Human Resources, the next step can only be taken after the resolution has first been passed. Once it has been passed, it can then be rescinded in a subsequent EGM, and after that has been done, the authorities in question will have to be updated of the latest turn of events. Finally, another resolution must be passed at a subsequent meeting for the rescinding of the previous decision which took place during the extraordinary general meeting.
In Malaysia, there is no statutory requirement for any company to hold any extraordinary general meetings (EGMs). Only annual general meetings (AGMs) are legally required to be held according to the latest edition of Malaysia’s Companies Act.
However, this lack of legal requirement regarding EGMs might not necessarily extend to certain companies. This is the case because such companies have stipulations regarding the holding of EGMs within their company regulations or Articles of Association. Such stipulations may sometimes require the company to hold an EGM at certain points. Any such stipulations are required to be followed unless they are amended at any point. In this regard, the holding of an EGM differs from the holding of an AGM in Malaysia because a company must hold an AGM even if it not bound by stipulations contained in its Articles of Association.
The Companies Act contains further information related to the holding of AGMs and EGMs in Malaysia.
In company that with the shareholding structure of 51% and 49%, is any agenda in the EGM will be resolved as per 51% shareholder wanted as they are the majority?
Should any majority of shareholders agree to a particular agenda during an EGM, the agenda will be resolved in accordance with the desires of the majority of shareholders.
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