What percentage of voting rights is needed to force directors to call an extraordinary general meeting?

What percentage of voting rights is needed to force directors to call an extraordinary general meeting?

• A. 15%
• B. 5%
• C. 10%
• D. 20%

Answer: (C)

To understand why a specific percentage of voting rights is required to compel directors to convene an extraordinary general meeting (EGM), it is essential to refer to common corporate governance practices and regulations that govern such decisions. In many jurisdictions, shareholders holding a minimum of 10% of the voting rights can request an extraordinary general meeting. This requirement is designed to ensure that a significant minority of shareholders can trigger such important meetings to raise issues, discuss corporate strategies, or address governance concerns that may arise. This percentage threshold is strategically established to balance the need for shareholder involvement with the efficiency of corporate governance. Allowing too low a percentage, such as 5%, might lead to frequent and potentially disruptive demands for meetings, while a requirement that is too high could disenfranchise minority shareholders who wish to voice their concerns or effect changes. In summary, the need for a 10% threshold reflects a compromise between shareholder rights and the practicality of managing corporate affairs, enabling meaningful shareholder influence while maintaining orderly governance processes.

To understand why a specific percentage of voting rights is required to compel directors to convene an extraordinary general meeting (EGM), it is essential to refer to common corporate governance practices and regulations that govern such decisions. In many jurisdictions, shareholders holding a minimum of 10% of the voting rights can request an extraordinary general meeting. This requirement is designed to ensure that a significant minority of shareholders can trigger such important meetings to raise issues, discuss corporate strategies, or address governance concerns that may arise.

This percentage threshold is strategically established to balance the need for shareholder involvement with the efficiency of corporate governance. Allowing too low a percentage, such as 5%, might lead to frequent and potentially disruptive demands for meetings, while a requirement that is too high could disenfranchise minority shareholders who wish to voice their concerns or effect changes.

In summary, the need for a 10% threshold reflects a compromise between shareholder rights and the practicality of managing corporate affairs, enabling meaningful shareholder influence while maintaining orderly governance processes.