If you are studying business communication or company law, two terms keep popping up: AGM and EGM. They look similar at first glance, but they are not the same. An Annual General Meeting (AGM) happens once a year, while an Extraordinary General Meeting (EGM) can happen anytime. Both are important, both are legal, and both bring shareholders and directors together.
But here is the twist. Many learners confuse them, and even professionals sometimes use the words interchangeably. That is why we are here today, to make the AGM vs EGM difference crystal clear.
By the end of this guide, you will know what an AGM is, what an EGM is, how they are similar, how they are different, when each should be called, and why both are critical for corporate governance. Along the way, I will connect you to related articles like the types of company meetings so you get the full picture.
What is an AGM?
An Annual General Meeting (AGM) is a formal meeting held once every year. Its main purpose is to allow shareholders to review the company’s financial performance, elect directors, and approve dividends.
Imagine it like an annual parent-teacher meeting at school. Parents want to know how their children are performing, and teachers explain progress, challenges, and future goals. Similarly, in an AGM, shareholders want to know how the company performed and what plans are in place for the future.
An AGM is not just a tradition. In most countries, it is a legal requirement. Public companies must hold AGMs, while private companies may not always be required. For more depth, you can check the dedicated article on Annual General Meetings, which explains their purpose in detail.
What is an EGM?
An Extraordinary General Meeting (EGM), as the name suggests, is a special meeting. It does not follow a fixed schedule like an AGM. Instead, it is called when urgent issues arise that cannot wait until the next AGM.
Think of it like a fire alarm at school. You do not plan it a year ahead. If something urgent happens, everyone gathers immediately to decide what to do.
Common reasons for calling an EGM include approving a merger, changing the company constitution, or raising emergency capital. Without EGMs, companies would be forced to wait months to make urgent decisions.
If you already studied the different types of company meetings, you will know that EGMs are one of the most flexible and action-oriented meetings.
Key Similarities Between AGM and EGM
Before we highlight differences, let us be fair and look at their similarities. After all, both are forms of company meetings, and they share some ground.
- Formality: Both AGMs and EGMs are formal gatherings of shareholders.
- Notice Requirement: Both require a formal notice of meeting. Without proper notice, decisions may be invalid.
- Quorum: Both need a minimum number of members present to proceed.
- Minutes: Both must have official meeting minutes recorded by the secretary.
- Participation: Both involve shareholders, directors, and the company secretary.
So, while their timing and purpose differ, their structure has many common elements.
Major Differences Between AGM and EGM
Now comes the heart of the matter. Let us break down the AGM vs EGM differences.
| Factor | AGM (Annual General Meeting) | EGM (Extraordinary General Meeting) |
|---|---|---|
| Frequency | Held once every year | Held anytime, as needed |
| Purpose | Routine matters like approving accounts, electing directors, declaring dividends | Urgent or special issues like mergers, amendments, crisis funding |
| Legal Requirement | Mandatory for most public companies | Not mandatory unless urgent matters arise |
| Agenda | Covers wide range of annual matters | Focused on specific urgent topics |
| Timing | Within six months of financial year-end (varies by law) | Whenever required, no fixed schedule |
| Called By | Directors, as per law | Board, shareholders, or tribunal depending on jurisdiction |
| Example | Approving yearly financial statements | Approving merger with another company |
This table shows the contrast in a simple, student-friendly way.
When Should a Company Call an AGM vs an EGM?
A company should call an AGM when it needs to:
- Present annual financial statements.
- Elect or re-elect directors.
- Declare dividends.
- Appoint auditors.
A company should call an EGM when it needs to:
- Approve a sudden merger or acquisition.
- Amend its constitution or bylaws.
- Handle a legal or financial crisis.
- Raise urgent capital.
In short, AGMs are for routine, while EGMs are for emergencies.
Role of Company Secretary in AGM vs EGM
The company secretary is the backbone of both AGMs and EGMs. Their role includes:
- Drafting and sending the notice.
- Preparing the agenda.
- Recording accurate minutes.
- Ensuring compliance with company law.
Without the secretary’s careful work, both AGMs and EGMs may lose their validity. For more, you can check the guide on appointment of a company secretary.
Importance of AGM and EGM for Shareholders
Both meetings serve different purposes, yet they are equally important for shareholders.
- AGMs give shareholders the chance to understand annual performance, hold directors accountable, and approve dividends.
- EGMs give shareholders the power to act quickly on urgent matters, protecting their investments.
Together, AGMs and EGMs ensure a balance between routine governance and flexible decision-making. This is why they are considered part of the essentials of valid meetings.
Advantages and Disadvantages of AGM vs EGM
Advantages of AGMs
- Ensures transparency.
- Provides shareholders a voice.
- Legal compliance builds investor confidence.
Disadvantages of AGMs
- Time-consuming.
- Can become a mere formality.
- Sometimes dominated by majority shareholders.
Advantages of EGMs
- Quick decision-making.
- Useful for emergencies.
- Focused discussions on a single topic.
Disadvantages of EGMs
- Costly if held frequently.
- Can be misused to rush decisions.
- May create shareholder conflicts.
This dual perspective reminds us of your coverage of advantages and disadvantages of meetings, where you highlighted both sides clearly.
Modern Trends in AGM vs EGM
Times have changed, and so have company meetings. Today, many AGMs and EGMs are held online.
- Virtual AGMs and EGMs: Shareholders attend from anywhere.
- Hybrid Meetings: A mix of physical and online participation.
- Electronic Voting: Speeds up the process and ensures wider participation.
- AI Note-Taking: Minutes can now be generated instantly.
This trend is similar to how video conferencing has reshaped communication in general.
Conclusion
So, what have we learned? AGMs and EGMs are like cousins. Both are part of company law, both involve shareholders, and both are important. But their timing, purpose, and legal framework differ significantly.
- AGMs are annual, routine, and mandatory.
- EGMs are extraordinary, urgent, and flexible.
If you are a student, remember this: AGM is for yearly governance, EGM is for urgent matters. If you are a professional, never confuse the two because the law does not.
To dive deeper, explore the posts on meeting minutes and notice of meeting. Together, these resources give you the complete picture of company meetings.
So next time someone asks you the difference between AGM and EGM, you can confidently say, “It is the difference between routine governance and urgent decision-making.”