Conducting Extraordinary General Meeting (EGM) in India

EGMs are duly convened meetings of the members/shareholders of a company held between two annual general meetings to address an urgent need; they facilitate the management of urgent issues that cannot be delayed till the next annual general meeting.

Shareholders and executives of companies often meet once every year for an annual general meeting (AGM) to discuss various aspects of the company and its future. However, while this meeting is held on a fixed date and time and occurs every 12 to 18 months, at times, between two annual meetings, there might be a need to call the executive and shareholders to discuss urgent matters. Such meetings are referred to as extraordinary general meetings (EGM) and are also knows as emergency general meetings or special general meetings. All business conducted in the EGM is called Special Business.

An EGM can be called for:

• Any legal issue.
• Any issue that cannot be deferred to the next shareholders meeting.
• Time bound business decisions
• Internal disputes
• The removal of director/key manager.

Note: Although annual general meetings (AGMs) can only be held during business hours, EGMs can be held on any day, including national holidays and outside office hours as well. While a company board can only call AGMs, an EGM can also be held by the board on the request of a tribunal or shareholders.

Who can call an EGM?

An EGM can be called by the Board under following circumstances:

• Suo Moto by the Board
• Court of Law (under few circumstances)
• On member’s requisition

Valid Member’s Requisition

• In the case of a company having a share capital, members holding not less than one-tenth of such paid-up capital of the company that carry voting rights regarding that matter as of the date of depositing the requisition.
• In the case of a company not having a share capital, members holding not less than one-tenth of the total voting power regarding that matter as at the date of deposit of the requisition.

Provision for Conducting EGM

Modes of Conducting EGM

• Physical: EGMs can be conducted if the members are physically available at a common venue at a certain point in time.
• Video Conferencing (VC) or Other Audio-Visual Means (OAVM): When unavoidable, EGMs can be conducted through video conferencing or other audio-visual means. The company needs to ensure that the platform where the meeting is being conducted allows two-way communication, also known as tele-conferencing.

Location of EGM

As per Secretarial Standard (SS-2), there is no restriction regarding the place of conducting EGMs. An EGM can be held at any place within India, subject to the following exception wherein EGM can be conducted outside India as well:

An EGM of a wholly owned subsidiary of a company incorporated outside India, called by the Board of Directors of the company, can be held at a place outside India.

Note: Participation of directors through video conferencing or other audio-visual means shall be considered valid.

EGM Quorum

Section 103 of the Companies Act, 2013 contains provisions for quorum of a general meeting.

The following is quorum requirement at an EGM

Type of Company	Minimum Members (Quorum)
Private Company	2 members
Public Company with members upto 1000	5 members
Public Company with members upto 5000	15 members
Public Company with members above 5000	30 members

In case the quorum is not present within half an hour from the schedule time for the EGM, the meeting will be adjourned for the same day next week and will be held in the same place and time.

Requirements to Conduct EGM

Certain requirements must be met in order to hold an EGM, some of which are mentioned below:

• No gifts, coupons or cash shall be distributed to members in connection with the EGM.
• Every company that is listed on a recognized stock exchange and every company that has more than 1000 members shall offer its members the ability to vote on resolutions proposed during the meeting through electronic means.
• EGMs cannot be held without the presence of the quorum.
• A Minutes Book must be maintained to sign the minutes.
• The Chairperson must be present.
• Printing of the notice of EGMs must be arranged, while ensuring that the notice contains:
• The place, date and time for the meeting.
• E-voting procedure.
• Proxy form.
• Explanatory statement.
• Topics/issues to be discussed in the meeting.
• Route map.

Procedure to Follow to Conduct an EGM

Conduct a Board Meeting

• Issue a notice to all Directors of the company for a Board Meeting at least seven days in advance of the meeting.
• Share agenda, notes to agenda and resolution draft along with the notice.
• Hold the meeting of the Board of Directors to:
• Fix the day, date, time, and venue for EGM.
• Approve the draft notice and an explanatory statement of the EGM.
• Authorize the Director or the Company Secretary to sign and issue a notice for EGM.
• Decide on the cut-off date for reckoning of the members entitled to vote.
• Permit the Chairman or, in case he’s unavailable, any other director to report on e-voting, receive the scrutinizer’s register and other related papers.
• Prepare the minutes of meeting within 15 minutes after the conclusion of the Board meeting and circulate it with all the Directors for their feedback.

Notice for EGM

The members must be alerted by the company through a notice of not less than 21 days if they are to be called for an EGM. The notice should clearly state the topic of discussion for the EGM along with the day, date, time, and place of the meeting. The notice should be given to all of the following:

• Members of the company.
• The legal representative of deceased member, if any.
• Assignee of an insolvent member.
• Directors of the company.

The notice may be shared with concerned individuals through ordinary post or speed post, facsimile, registered post, courier, or email or any electronic medium. However, if an e-voting facility is being offered, the notice cannot be shared through an ordinary post.

• Every member of the company shall receive a notice in writing about every meeting.
• The meeting notice should have a statement specifying the special need that needs to be addressed in the EGM.

Shorter Notice: If 95% or more members with the voting power in the meeting agree, an EGM can be held on a shorter notice.

Explanatory Statement

According to section 102 of the Companies Act, 2013, every EGM notice must include an explanatory statement that includes all relevant facts and details. This ensures that members can make an informed decisions and comprehend the significance, extent, implications, and ramifications of the business to be discussed at the meeting.

Organizing the EGM

• Check if the quorum is present to hold the meeting. The quorum needs to not only be present at the beginning of the meeting but also during its proceedings.
• The Chairman of the Board shall take charge and conduct the meeting.
• In case the Chairman is not present within 15 minutes from the commencement of the meeting, is unwilling to act as the Chairman of the meeting or if no Director has been designated to do so, the Directors present shall choose one amongst themselves to take up the role.
• In case no Director is present within 15 minutes from the commencement of the meeting or no Director is willing to take the Chair, the members present shall elect one of themselves to be the Chairman on the basis of a show of hands.
• The Chairman shall be responsible to explain the reason behind the absence of any Director from the meeting.
• Directors and the Company Secretary shall be seated with the Chairman.
• The Chairman will be responsible for conducting a fair and impartial meeting hereafter and discuss only the topics stated in the Notice issued. They will also be responsible for managing the voting process in the Meeting keeping the provisions of the Companies Act, 2013 in mind.
• The Chairman will explain the goals and implications of the resolutions suggested before putting it up for voting in the meeting, hear the comments of members, and answer their queries related to any item of the business discussed in the Meeting.
• The e-voting facility shall be provided to the Members of the company to exercise their voting rights.
• Ensure that a vote of thanks is given to the Chair at the end of EGM.

Conclusion

EGMs in India play a vital role in company proceedings and help deal with major issues that arise mid-year and which cannot be delayed until the next annual general meeting. It must also be kept in mind that failing to adhere to the adequate proceedings of the EGM can result in the defaulter being penalized as per the standards stated in the Companies Act, 2013.