An Extraordinary General Meeting (EGM) is a shareholder’s meeting in any case of emergency or general issues and is usually need to prepare by the company secretary. This is different from the Annual General Meeting (AGM).
Shareholders convene an EGM to address urgent matters arising from the AGM and typically deliberate emergency measures in response.
For companies that want to register in Malaysia, holding an AGM is a mandatory requirement, while convening an EGM occurs only when necessary. This article will further explore additional distinctions between the two types of meetings.
Difference between an Extraordinary General Meeting (EGM) and an Annual General Meeting (AGM)
An AGM is a compulsory meeting among the company’s stakeholders and shareholders. At an AGM, various reports neet to present by the directors of the company to its shareholders. Such reports include:
- Annual reports
- Financial reports
During the AGM, shareholders with voting rights need 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 the company’s management | Ordinary business matters and special business matters.
Reports include annual reports consisting of various financial performance reports containing information regarding the company’s performance and strategy for the presentation. |
| Regulatory | No rules or regulations that must be complied | A company in Malaysia must hold its initial AGM within the first 18 months of its incorporation date.
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 own 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 various stakeholders receive sufficient evidence and support regarding whether the chairperson’s actions are valid or invalid, they convene an EGM to decide whether he should remain in that position or remove for misconduct.
How to Request for an Extraordinary General Meeting (EGM) in Malaysia?
An official request must be by company shareholders and directors who either possess a 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 directors are to provide notice to others about the details of the EGM.
The request should outline the objective of the proposed EGM and you need to submit in the form of a document signed by all relevant personnel who wish to conduct the EGM. If the request approves, the directors will decide whether to carry out or deny the EGM.
Note that a directorial decision of a company cannot occur without the presence of a director.
FAQs
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?
Hello Martin,
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.
Please contact us if you would like further information on the details of the shareholders of any Malaysian company,
Thank you for your question.
Paul