How to Hold Extraordinary General Meetings (EGMs) in Singapore
What makes an Extraordinary General Meeting (EGM) “extraordinary”?
As a small business owner, you would have heard of Annual General Meetings (AGMs) since every company is required to hold one every year, but may still be unsure about what an EGM is. Read on to find out more.
AGM vs EGM
The EGM is a company meeting convened in the event important business matters requiring shareholder approval surface. This is because some matters may require approval before the next AGM can be held, and it may not be advisable to wait until then.
In such situations, EGMs can be convened. Such agendas may include altering the company’s constitution, or an election for new directors or board members etc.
On the other hand, the AGM is a compulsory meeting for directors and shareholders of a company to present and decide on prescribed matters. Some of these compulsory matters stipulated in the Companies Act (CA) include:
- Directors presenting the company’s financial statements;
- Auditors reporting the financial statements to the members;
- Appointing or re-appointing an auditor for the next upcoming year.
AGMs must be held within 4 to 6 months of the company’s financial year end. You can learn more in our article on AGMs in Singapore.
Who Can Call an EGM?
The board of directors and members of the company may call an EGM. In fact, there are 2 options in which members may call for an EGM:
- Any members holding at least 10% of the total number of voting shares can call on the directors to convene an EGM; or
- 2 or more members holding at least 10% of the total number of issued shares can call an EGM.
Generally, the first option is preferred since it would be easier for the directors to notify and convene the meeting instead of having the individual members notify all other members under option (2).
The court also has the power to order an EGM, where it is “impracticable” to call or conduct a meeting in the usual manner. Some of the recognised situations include:
- The inability to meet quorum requirements;
- Deadlock in day to day management
Notifying the Company of an EGM
In order to successfully hold an EGM, the company is obliged to give written notice of the EGM to its members.
For private companies, a minimum notice period of 14 days is required for all meetings. However, for public companies, a notice period of 21 days is required for special resolutions, though the company’s constitution may provide for a different notice period.
|EGM Notice Period for Private Companies||EGM Notice Period for Public Companies|
|Ordinary Resolutions||14 days||14 days|
|Special Resolutions||14 days||21 days|
If your company finds the need to have a shorter notice period, it is possible if a majority of the members who together hold at least 95% of the total voting rights agree to it.
In the notice, sufficient information of the proposed business matter of the EGM must be provided. The date, place and time of the meeting should be clearly stated in the notice. The notice should also contain the agenda of the EGM to inform members of the business matters to be discussed at the meeting.
Such notices may be made by registered post. Otherwise, electronic transmissions such as emails or publication on the company’s website are acceptable. This is provided your company’s constitution expressly prescribed the use of such electronic transmissions.
What Constitutes a Valid EGM?
In order for the EGM to be properly constituted, the quorum must be met. The quorum refers to the minimum number of members entitled to vote who must be present during the meeting. Most company constitutions would specify the quorum for meetings.
If the company constitution does not specify the quorum, the minimum number of members who must be present in person is 2, as stated in section 179(1)(a) of the CA.
After the EGM
The voting outcome of an EGM is generally revealed by the end of the meeting. Thus, whether or not the resolutions have been passed would be known by the end of the EGM.
However, for certain situations, there are steps to take after an EGM to make official the resolution(s) passed.
One example is when a company is wound up voluntarily by passing a special resolution at an EGM. A copy of the special resolution must be lodged with the Accounting and Corporate Regulatory Authority (ACRA) within 7 days.
Further, a notice of the same resolution must be published in at least one newspaper in Singapore within 10 days. Only then can a liquidator be appointed by the directors to commence voluntary winding up proceedings.
While running your business, you may need to convene an EGM to gather members of your company for discussion or decisions on matters. While you never know when you will need to call for an EGM, it is certainly helpful to keep in mind some of the issues and procedures illustrated in this article.
Understandably, calling and conducting an EGM may be confusing at times given the various ways to convene one, as well as ensuring that all the requirements are met. If you need further assistance in convening an EGM and/or preparing the resolutions to be passed during the EGM, you may wish to engage a corporate services firm.
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