Difference Between Annual General Meeting (AGM) and Extraordinary General Meeting (EGM)IntroductionThe goal and regularity of the meeting are where AGM and EGM vary from one another. An annual general meeting (AGM) is an annual gathering held by businesses to discuss their financial performance, appoint executives, and conduct other activities as defined by the company's bylaws. On the contrary, an Extra General Meeting (EGM) is a meeting called outside of the corporation's regular session to address and vote on a specific issue that must be resolved before the next AGM. Unlike an AGM, which is scheduled once a year, an EGM can be convened whenever necessary. An EGM serves as a special meeting with a specific purpose, such as deliberating a merger, acquisition, or significant policy change. On the other hand, an AGM is a routine meeting that typically follows a predetermined agenda. Annual General Meeting (AGM)The Annual General Meeting (AGM) of the company is an annual event where investors and directors come together to discuss and vote on important matters like dividend distribution, approval of financial reports, and election of directors. It provides an opportunity for investors to raise concerns and seek clarification on the company's performance and direction. AGMs are typically mandatory for publicly traded companies, with attendance and voting being obligatory. Goal- Stakeholders of an organization convene annually for the Annual General Meeting (AGM), where they discuss and vote on important matters regarding the business's objectives and functions.
- Reviewing financial statements, electing directors, and approving any major changes to the company's bylaws are among the key agenda items.
- Moreover, the AGM provides shareholders with an opportunity to be informed about the company's accomplishments and prospects, as well as to pose inquiries.
- This event holds significance for stakeholders as it empowers them to have a say in the direction of the business and to ensure accountability of the board members for the organization's performance.
BenefitsThe AGM gives shareholders the chance to: - Analyze the business's financial performance, specifically the audited financial statements.
- Choose or reappoint members of the board of directors.
- Cast votes on important corporate matters, such as changes to bylaws or the issuance of additional shares.
- Engage in discussions with the company's management regarding any concerns you may have.
- Obtain details about the company's strategies and operations.
- Provides shareholders with a platform to hold the business's management accountable for their decisions and actions.
DrawbacksThe Annual General Meeting (AGM) has several possible drawbacks, such as: - Duration and Cost: AGMs can be expensive to hold in terms of both time and money, requiring a great deal of planning and organization.
- Restricted Involvement: Attendance at AGMs is frequently low, especially if they are conducted virtually. This may restrict shareholders' involvement and participation.
- Strict Conversation: AGMs frequently feature a packed schedule and stringent time restrictions, which can reduce the amount of time available for important shareholder discussion and debate.
- Restricted ability to make Decisions: Generally speaking, at an AGM, shareholders are limited to voting on the particular issues put forth to them; they may not be able to propose or cast a ballot on other significant concerns.
- Not Enough Representation: There are situations where the number of attendees does not fairly reflect the company's shareholders; some may not be there, or they may be accompanied by proxy representatives who may never be entirely aware of their rights as shareholders.
- Restricted Effect: AGMs normally take place once a year, and the choices that are taken there might have a small effect on how the business operates or performs.
Extraordinary General Meetings (EGM)An extraordinary general meeting (EGM) refers to a gathering of shareholders outside the regular schedule of annual general meetings (AGMs). EGMs are typically held for specific purposes, such as voting on significant restructuring or acquisition proposals, approving major purchases or mergers, or dismissing a director from the board. Unlike AGMs, EGMs are not necessarily held annually and are convened as required. Shareholders are notified of an EGM and its purpose, providing them with the opportunity to attend and vote on any matters brought up for discussion. Goal- An Extraordinary General gathering (EGM) is a special meeting organized by the shareholders of a company outside of the regular annual or general meetings. Its purpose is to discuss and vote on urgent matters that cannot be postponed until the next scheduled meeting.
- During an EGM, shareholders address important issues that may require significant changes to the company's operations or organizational structure. These matters could include decisions regarding mergers or acquisitions, the sale of a substantial portion of the company's assets, or the removal of a certified public accountant or director.
- The EGM can be called by either the Board of Directors or a specific percentage of shareholders. It provides a platform for shareholders to actively participate in decision-making processes and ensure that urgent matters are promptly addressed.
BenefitsAn Extraordinary General Meeting (EGM) has the following benefits: - Adaptability: The ability to hold an EGM at any moment facilitates prompt decision-making on significant matters that might come up at any time.
- Focus Specialised: It is possible to call an EGM to debate particular subjects, enabling a more targeted and effective discussion.
- Increased Involvement: Shareholders unable to make it to the annual general meeting (AGM) can nevertheless participate and voice their opinions on significant issues through an electronic general meeting (EGM).
- Enhanced Openness: During an EGM, shareholders have a chance to learn more about the business's activities and raise questions.
- Modifications to the Organisational Structure: An EGM may be convened to consider and approve structural changes to the company, such as a purchase or merger.
- Handling Drawn Votes: Investors re-voting on a specific subject at an Extraordinary General Meeting can help break any ties on votes that may have occurred during the AGM.
DrawbacksThere exist multiple possible drawbacks associated with arranging an Extraordinary General Meeting (EGM). - Price: A corporation may incur extra expenses for items like distributing letters to shareholders, renting a meeting room, and paying more staff to oversee the event, making holding an EGM expensive.
- Operational Disruption: Because management and employees may have to spend time and money getting ready for the meeting and handling any issues that come up, an EGM can disrupt a company's regular operations.
- Time Consuming: Everybody participating in an EGM may have to spend a lot of time organizing and attending the meeting, in addition to the shareholders needing to get to the venue.
- Poor Turnout: Investors who are uninterested or lack sufficient time can decide not to attend the EGM. The organization's inability to reach a quorum-the minimal number of shareholders needed for a meeting to be deemed legitimate-could be a challenge.
- Insufficient Readiness: It's possible that shareholders won't be well-prepared or educated on the topics up for discussion and voting at an EGM, which could cause uncertainty and bad decisions.
- Possibility of Dispute: During an EGM, conflicts may arise if topics up for discussion and vote are divisive or require significant changes to the organization's structure or methods of operation.
Annual General Meeting versus Extraordinary General MeetingSr. No. | Annual General Meeting | Extraordinary General Meeting |
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1. | Mandatory by law to be held every year. | Called, when necessary, usually to discuss particular ideas or problems. | 2. | Describes the company's routine business. | Focuses on particular, pressing issues that can't wait till the next AGM. | 3. | Every shareholder is entitled to attend and cast a vote. | Attendance and voting are restricted to shareholders who were registered at the moment of the EGM. | 4. | Among the topics on the agenda were the approval of the yearly financial accounts and the selection of auditors. | Items on the agenda that are unique to the reason the EGM was called, including a significant purchase or restructuring of the company. | 5. | Several days before the meeting, notice is given. | May be scheduled with less notice depending on the topic to be covered. |
ConclusionIn conclusion, both the AGM and the Extraordinary General Meeting (EGM) are gatherings of a company's shareholders. The Annual General Meeting, or AGM, is an annual meeting that takes place at a predetermined time each year, while the EGM is called whenever necessary to address particular matters that need to be discussed and can't wait till the next AGM.
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