Extraordinary General Meetings (EGMs) are essential for corporate governance in Singapore, allowing shareholders to address urgent matters that cannot wait until the Annual General Meeting (AGM).
Unlike AGMs, which are scheduled annually, EGMs are convened as necessary to discuss specific, pressing issues. This ensures that companies can make timely decisions in response to critical business needs.
In Singapore, EGMs are not just a matter of convenience, but a regulated process. EGMs are governed by the Singapore Companies Act and guidelines from the Accounting and Corporate Regulatory Authority (ACRA).
These regulations are in place to ensure that stakeholders are well-informed and can actively participate in the decision-making process. Understanding and adhering to these regulations is not just a matter of compliance, but a key factor in maintaining shareholder trust and transparency when leading a company in Singapore.
This article will provide a comprehensive understanding of EGMs, the legal requirements for holding them in Singapore, and the steps involved in organising and conducting these meetings.
Whether you are an experienced executive or new to corporate governance, this guide will equip you with the knowledge to manage EGMs effectively in Singapore.
What is an EGM in Singapore?
An EGM is an unscheduled, but formal gathering of a company’s shareholders and executives to address urgent or significant matters arising outside the AGM schedule. EGMs are convened to make important decisions that require immediate attention and cannot be postponed until the next AGM.
What is an EGM vs AGM?
- Annual General Meetings (AGMs): Held once a year, AGMs are scheduled meetings where routine matters such as the election of directors, approval of financial statements, and declarations of dividends are discussed.
- Extraordinary General Meetings (EGMs): Called as needed, EGMs focus on specific issues that arise unexpectedly, such as mergers, acquisitions, amendments to the company’s constitution, or other urgent corporate matters.
The table below provides a view of more key differences:
| Type of Meeting | EGM | AGM |
|---|---|---|
| Reason for Meeting | Urgent corporate matters | Compulsory annual meeting |
| Participants | Directors, shareholders, board members | Directors and shareholders |
| Can Be Called By | Board directors, members, and shareholders with at least 10% of the shareholding | Directors |
| When it Can Be Held | Any day, any time | Working days and business hours |
| Frequency | Whenever required | Once yearly |
| Main Purpose | To resolve urgent issues | To present financial statements and to approve other company transactions |
| Basis of Validity | Quorum | Resolution by written means |
| Minimum Number of Notice Days | Special resolutions for private companies: 14 days Special resolutions for public companies: 21 days | 14 days |
What Are the Common Reasons for Calling an EGM?
- Special Resolutions: A higher threshold of shareholder approval is needed for actions like amending the company’s articles of association, changing the company’s name, approving a merger or acquisition, authorising significant capital expenditures, or altering the share capital structure.
- Urgent Matters: Addressing financial crises, resolving legal disputes, or responding to regulatory requirements that cannot wait until the next AGM.
- Shareholder Initiatives: Shareholders holding a certain percentage of shares may request an EGM to discuss and vote on matters such as corporate governance changes, executive compensation, or environmental policies.
- Director or Shareholder Disputes: Resolving deadlocks on the board of directors, disputes over control or ownership, and other significant disagreements.
- Removal of an Executive: Deciding on the removal of an executive due to performance or other issues.
- Appointment or Removal of Directors: Addressing the need for changes in the board of directors.
- Issuance of New Shares: Approving the issuance of new shares to raise capital.
Compliance with Legal or Regulatory Requirements: Holding an EGM to approve major transactions like mergers or acquisitions, as required by local corporate laws or securities regulations.
As illustrated, EGMs play a vital role in maintaining corporate agility and responsiveness, so that companies can swiftly address critical issues with the consensus of their shareholders.
Legal Requirements for EGMs in Singapore
The legal framework for holding an EGM in Singapore is primarily governed by the Companies Act and the company’s constitution. These regulations ensure that EGMs are conducted in a fair and transparent manner, protecting the interests of all shareholders. Key legal requirements include:
EGM Notice Period
- The Companies Act stipulates that shareholders must be given a minimum notice period before an EGM. For ordinary resolutions, the notice period is typically 14 days. For special resolutions, the notice period extends to 21 days.
- The notice must include the date, time, and location of the meeting, as well as the agenda and full text of any resolutions to be considered. This ensures shareholders have ample time and information to make informed decisions.
EGM Quorum Requirements
- Quorum Definition: A quorum (minimum number of relevant people required) for an EGM is typically specified in the company’s constitution. If not specified, the Companies Act requires a minimum quorum of two members present in person or by proxy.
- Quorum Verification: The quorum must be met at the start of the meeting and maintained throughout. If the quorum is not met, the meeting must be adjourned or rescheduled.
Proxy Voting
- Proxy Appointment: Shareholders may appoint a proxy to attend and vote on their behalf. The proxy form must be submitted to the company at least 48 hours before the meeting.
- Proxy Rights: Proxies have the same rights as shareholders to speak and vote at the meeting.
Steps to Organise an EGM in Singapore
Step 1: Recognise the Agenda of the Meeting
The first step in organising an EGM is to establish the agenda. The board of directors identifies key issues that require immediate shareholder approval. These matters, often urgent and significant, form the resolutions that will be presented and voted on during the meeting.
Unlike AGMs, which are scheduled and can only be held on business days, EGMs can be convened on any day, including weekends and holidays, reflecting their urgent nature. The Company Secretary plays a crucial role in organising this step.
Related Read: A Company Secretary Represents a Key Role in Any Business. This is Why
Step 2: Notify Shareholders
Once the agenda is set, the company must notify shareholders and members about the EGM. This involves sending out a written notice that explains the importance of the meeting and outlines the resolutions to be discussed.
For private companies, the notice period is at least 14 days for special resolutions. For public companies, this period extends to 21 days. The specific notice period may vary depending on the company’s constitution, ensuring that all stakeholders have adequate time to prepare.
Step 3: Conduct the Meeting
On the day of the EGM, the chairperson reads each resolution to the attendees and proposes it for acceptance. The shareholders then discuss and vote on the resolutions.
The chairperson is responsible for managing the meeting, addressing any questions, overseeing the voting process, and announcing the results. It is crucial to meet the quorum requirements, which are defined in the company’s constitution, to validate the meeting and its resolutions.
Step 4: Actions Following the EGM
After the EGM, if the resolutions are approved, further actions may be required to formalise the decisions. For instance, if a special resolution to wind up the company is passed, the company must file a copy of the resolution with ACRA within 7 days.
Additionally, a notice of the resolution must be published in at least one Singapore newspaper within 10 days. These steps ensure that the resolution is officially recorded and communicated, allowing the company to proceed with necessary actions, such as appointing a liquidator for voluntary winding up.
Key Considerations for a Successful EGM in Singapore
Effective Communication With Shareholders
Clear and timely communication with shareholders is vital for the success of an EGM. Informing shareholders about the meeting well in advance, along with detailed explanations of the resolutions to be discussed, helps them understand the significance of the meeting.
This approach fosters transparency and builds trust, ensuring that shareholders are well-prepared to participate and make informed decisions.
Ensuring Compliance With Legal Requirements
Adhering to all legal requirements is crucial to avoid the invalidation of the EGM. This includes following the stipulated notice periods, meeting quorum requirements, and accurately documenting the proceedings.
Ensuring compliance legitimises the meeting and protects the company from potential legal disputes. Companies must stay updated with any changes in the legal frameworks and may consider using a trusted advisor like InCorp to maintain compliance.
Handling Shareholder Questions and Objections
During the EGM, it is essential to address any questions or objections raised by shareholders effectively. The chairperson should facilitate an open dialogue, allowing shareholders to express their concerns and providing clear, concise responses.
This practice ensures that all viewpoints are considered and helps in reaching a consensus. It also demonstrates the company’s commitment to transparency and accountability, vital in Singapore’s pro-business ecosystem.
Use of Technology for Virtual EGMs
The use of technology to conduct virtual EGMs has become increasingly important, especially in light of recent trends towards remote work and digital transformation.
Virtual EGMs offer several benefits, including greater accessibility for shareholders who may not be able to attend in person and reduced costs associated with physical meetings.
However, companies must ensure that virtual meetings comply with legal requirements and that the technology used is secure and reliable. This includes providing clear instructions on how shareholders can participate and vote electronically, ensuring that the integrity and confidentiality of the meeting are maintained.
Where to Next With InCorp
EGMs play a crucial role in maintaining corporate agility and responsiveness in a fast-paced business landscape. By adhering to the legal requirements and effectively managing the logistics of these meetings, companies in Singapore can ensure they remain compliant and maintain shareholder trust.
At InCorp, we offer comprehensive corporate secretarial services designed to help you navigate the complexities of AGMs, EGMs, and general corporate governance, ensuring your meetings are effective and compliant with regulatory standards. For more insights and assistance, contact InCorp today and let our experts support your corporate governance needs.
FAQs About AGM
What is the difference between an AGM and an EGM?
- An AGM (Annual General Meeting) is a mandatory yearly meeting held to discuss routine matters such as financial statements and director elections. An EGM (Extraordinary General Meeting) is convened as needed to address urgent or significant issues that arise between AGMs.
What are some common reasons to call an EGM?
- Common reasons include addressing urgent financial crises, resolving legal disputes, approving major transactions like mergers or acquisitions, and making significant changes to the company’s constitution or board.
How much notice is required for an EGM in Singapore?
- For private companies, a minimum of 14 days' notice is required for an EGM. For public companies, the notice period extends to 21 days. This ensures shareholders have ample time to prepare.
Get help with your EGMs with InCorp!
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