The calling of an Extraordinary General Meeting (EGM) is a crucial aspect of corporate governance and is governed by specific regulations outlined in the Companies Act, 2013, along with the Companies (Management and Administration) Amendment Rules, 2014, and Secretarial Standard-2. In this article, we will delve into the process of calling an EGM, the requisition process, and the obligations of the board in this regard.
An Extraordinary General Meeting (“EGM”) of a Company can be called by the Board either in the following instances; –
01. whenever Board itself deemed fit (Suo Moto) or,
02. On the requisition made by; –
(a) in the case of a company having a share capital, such number of members who hold, on the date of the receipt of the requisition, not less than one-tenth of such of the paid-up share capital of the company as on that date carries the right of voting;
Procedure for making valid requisition by the member(s):
- The requisition shall set out the matters for the consideration of which the meeting is to be called.
- Such requisition be signed by the requisitionist(s)
- Such requisition shall be sent to the registered office of the company (in writing or through electronic mode) at least clear twenty-one days prior to the proposed date of such extraordinary general meeting.
Board’s obligation on a Valid requisition;
- Upon the receipt of a valid requisition, the Board have a period of 21 days to call for an EGM. The EGM must be then held with 45 days from the day of the EGM being called.
- In the event where the Board fails to call for an EGM, then it can be called for by the requisitionists themselves during a period of 3 months from the day the requisition was deposited.
Important Asspects for calling EGM
- The notice shall be signed by all the requistionists or by a requistionists duly authorised in writing by all other requistionists on their behalf or by sending an electronic request attaching therewith a scanned copy of such duly signed requisition.
- The notice of the meeting shall be given to those members whose names appear in the Register of members of the company within three days on which the requistionists deposit with the Company a valid requisition for calling an extraordinary general meeting
- The notice of the meeting shall be given by speed post or registered post or through electronic mode. Any accidental omission to give notice to, or the non-receipt of such notice by, any member shall not invalidate the proceedings of the meeting.
Conclusion:
Understanding the process of calling an Extraordinary General Meeting is essential for both company boards and shareholders. The Companies Act, 2013, and associated rules provide a clear framework for when and how an EGM can be convened, the requisition process, and the board’s obligations. Compliance with these regulations is crucial to ensure transparency and effective corporate governance. As such, companies and their stakeholders must be well-versed in these procedures to navigate EGMs successfully when the need arises.
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