Introduction
The Extra Ordinary General Meeting is covered under Section 100 of the Companies Act 2013. It is a special kind of meeting conducted by the Board of Directors (BOD) where some special decisions are to be taken by the company. EGM may be held at any place within India. Provided that an EGM of a company, other than of the wholly owned subsidiary of a company incorporated outside India, shall be held at a place within India.
Evidently, an extraordinary general meeting can only be conducted by the Board of directors (BOD) as indicated under sub-section (1) of Section 100 of the Companies Act 2013. However, in some special circumstances, EGM may be conducted by the requisitionists of the company.
Read the article to get complete knowledge of Extra Ordinary General Meeting.
What is an Extraordinary General Meeting?
Sub-section (4) of Section 100 of the Companies Act mandates the board to call an EGM within 21 days from the date of receipt of a valid requisition. Additionally, such a meeting shall be convened on a day not later than 45 days from receipt of such requisition.
An extraordinary general meeting is a meeting other than a meeting in which the decisions on urgent matters are made.
How to call an EGM?
An extraordinary general meeting can be convened by specific members/shareholders or group of members of a company in two cases, namely:-
Case 1: where the company is having share capital
Where a company is having a share capital then, in that case, only the members holding 10% of the company’s paid up capital or more can call an EGM. They must carry voting rights regarding the agenda on the date of submitting the request.
Case 2 : where the company is not having share capital
Where a company is not having any share capital then, in that case, an EGM can be called by the members that hold at least 10% of the total voting power of all the members having right to vote.
There are some additional requirements which include preparing and circulation of notice of EGM and proper quorum to be present. Continue reading and know all about it.
Notice of Extra Ordinary General Meeting
Nothing under the law is done casually, there are some rules and provisions required to be followed. Accepting this fact, Rule 17 (2) to (8) contains the provision for convening the EGM along with the details contained in the notice and mode in which the notice must be sent.
So, as per the provision, the notice for calling an EGM requires that the notice must specify the place, date, day, and hour of the meeting and shall contain the business to be transacted at the meeting. Moreover, the provision of sub-section (2) of section 114 are required to adhere in case of special resolutions.
While the notice shall be signed by all the requisitionists or by a requisitionist duly authorized in writing by all other requisitionists on their behalf or by sending an electronic request attaching therewith a scanned copy of such duly signed requisition.
Talking about the mode of sending the notice, it must be either through speed post or registered post or through electronic mode.
It must be taken care of that the notice is sent to only those members whose names appear in the Register of members of the company. However, in case the meeting was not conducted, then it shall be necessary being their right to receive a list of members along with their registered address and number of shares held and the company concerned.
Quorum for conducting an EGM
Simultaneously, the quorum is also a necessary compliance which must be taken care of. So, in many companies, the articles of association prescribe the provision for quorum. However, where there is no such provision mentioned, the following number of members shall be the quorum.
In the case of a public company, five members must be personally presented; and
In the case of any other company, two members shall be present.
What is the punishment for non-conducting an EGM?
Section 100 does not state any of the penal provisions applicable for contravention of the section. However, Section 450 will be applicable stating the penalty liable to be paid by the company and the officer.
So, according to Section 450, the company and every officer of the company who is in default shall be punishable with a fine of up to Rs. 10,000. Where the offence is a continuous one, the fine shall be Rs. 1,000 for every day of contravention.
Also Read
Contact EAdvisors regarding any query.
Know about Company Registration
