Corporations hold both an annual general meeting (AGM) and an extraordinary general meeting (EGM) for different purposes. They are both useful opportunities to discuss business matters and decisions. Specific laws govern the operation of both meetings. Read our guide to uncover the difference between an annual general meeting and an extraordinary general meeting.
What is an Annual General Meeting (AGM)?
In short, corporations hold annual general meetings (AGM) yearly according to a meeting schedule. Generally speaking, at an AGM, company members and directors meet to discuss the company’s affairs.
The Corporations Act 2001 (Cth) governs the requirements surrounding AGM’s. For instance, a public company must hold an AGM once a year. You must hold within 5 months of the conclusion of the companies financial year. Further, a public company must hold an AGM within 18 months after its registration. Alternatively, proprietary companies are not legally required to hold an AGM. It is important for members at the meeting to take minutes. You can customise our Shareholder Meeting Minutes for free.
What is an Extraordinary General Meeting (EGM)?
On the other hand, an extraordinary general meeting (EGM) is an unscheduled meeting. Ultimately, you would convene an EGM to consider urgent or new matters that cannot wait until the next ordinary meeting. You may have heard it referred to as a special meeting.
The Corporations Act 2001 (Cth) also included the rules surrounding an EGM. For instance, if you would like to convene an EGM as a member, you must hold at least 5% of the votes cast at a general meeting. Further, if you are a director, you can convene a meeting.
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Requirements of Meetings
There are a number of legal requirements surrounding the operation of member’s meetings. For instance:
For both an AGM and EGM, you must give notice of the meeting to members. For example, the information required in a notice includes the place, date, time and technology available. You must outline the general nature of business to be discussed, any special resolutions to be proposed and proxy information. Moreover, you must give members and directors at least 21 days notice of a meeting if you are company which is not listed.
You may have heard of the term quorum, but what does it mean? Essentially, a quorum is the minimum number of people that must be in attendance for a valid meeting to be held. The quorum for a general meeting is two members. You should note that these members must be present for the duration of the meeting. If members are not present within 30 minutes of the meeting’s scheduled time, you must adjourn the meeting.
An important part of both an AGM and EGM is voting. Ultimately, your voting power depends on the voting rights attached to your shares. Your company constitution generally outlines the voting rights attached to shares. Generally, votes are taken by a show of hands.
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If permitted under the company constitution, you can choose to appoint a proxy. A proxy can be elected to vote on your behalf. Generally speaking, to ensure all proxies are included in the vote, they should only be used when a poll is cast.
Final Thoughts
To conclude, companies hold both an AGM and EGM for different purposes. The key difference is that an AGM is a scheduled meeting which must be held annually. On the other hand, an EGM is an ad-hoc meeting convened in response to an urgent matter. While the two meetings hold different purposes, the legal requirements surrounding their operation are similar in nature. If you require assistance in understanding your legal obligations, consult a Company Lawyer.
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