Guide to Extraordinary General Meeting
Guide to Extraordinary General Meeting
All general meetings of a company in India except the statutory meeting and the annual general meetings are called an extraordinary general meeting. There is a gap of around a year or 18 months between two annual general meetings. Therefore, if an important business arises in between two annual general meetings that require shareholders approval, then an extraordinary general meeting can be called.
Calling an Extraordinary General Meeting
An extraordinary general meeting can be called for transacting any business of urgent nature, which cannot be postponed until the next annual general meeting. Usually an extraordinary general meeting (EGM) can be called in the following circumstances:
- Calling of the EGM by the Board on its own motion.
- Calling of EGM by any Director, if at any time there are not within India Directors capable of acting who are sufficient win number to form a quorum.
- Calling EGM by the Board of requisition of members as per provision of the Act.
- Calling of EGM by the requisitionists themselves.
- Convening of EGM by the Company Law Board or Tribunal
Function of Extraordinary General Meeting
The Companies Act, 2013 provides that all business that are considered in an extraordinary general meeting (EGM) shall be considered as special business. The function of an EGM is two-fold. First, an EGM is used to provoke them to know about certain important matters pertaining to the company and if necessary, makes them attend the meeting personally whenever possible. Secondly, the EGM places a duty on the company to provide to the shareholders more information about the business to be transacted at the EGM in the form of an explanatory statement. The explanatory statement attached to the notice to extraordinary general meeting usually contains information like:
- The nature of concern or interest, financial or otherwise, if any.
- Information and facts that may enable members to understand the meaning, scope and implications of the items of business and to take decisions.
Holding an Extraordinary General Meeting
An extraordinary general meeting can be called on any day other than a national holiday. The articles of association of the Company would detail the procedure for calling for or holding an extraordinary general meeting.
Extraordinary General Meeting on Requisition of Members
An extraordinary general meeting can be convened on the requisition of members whether having share capital or not. However, to call and hold an extraordinary general meeting, the requisition must be signed by holders of not less than one tenth of paid-up share capital. The requisition for extraordinary general meeting must be submitted at least 21 days prior to the proposed date of the extraordinary general meeting. If the company fails to proceed within 21 days and to call the above said meeting within 45 days then the members may call themselves a meeting within a period of 3 months from the date of deposit of requisition to the company and after expiry of 45 days.
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