Summary: An Extraordinary General Meeting (EGM) is a vital assembly of shareholders convened to address urgent matters that cannot wait until the next Annual General Meeting (AGM). Governed by the Companies Act, 2013, EGMs allow companies to address critical issues such as business strategy changes, dispute resolutions, or legal compliance. Unlike AGMs, which are scheduled annually for routine matters, EGMs are called when immediate shareholder decisions are required. The Board of Directors typically calls an EGM, but it can also be requisitioned by shareholders holding a minimum of 10% of the voting rights. Notice of the EGM must be sent at least 21 days in advance unless 95% of the voting members consent to a shorter notice period. The quorum for an EGM varies based on company type, and resolutions can be ordinary or special, requiring different levels of majority approval. Proper minutes must be maintained to ensure compliance with the Companies Act. An EGM serves as a critical tool for corporate governance, ensuring that urgent decisions are made in a transparent and legally compliant manner.
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Understanding an Extraordinary General Meeting (EGM) under Companies Act, 2013
An Extraordinary General Meeting (EGM) is a crucial gathering of a company’s shareholders, held to address urgent matters that cannot be deferred until the next Annual General Meeting (AGM). The Companies Act, 2013, outlines the procedures and requirements for convening and conducting an EGM, ensuring that companies operate in compliance with corporate governance standards and legal mandates.
What is an Extraordinary General Meeting (EGM)?
An EGM is any meeting of a company’s shareholders other than the Annual General Meeting. While the AGM is a scheduled meeting held once a year to discuss regular business such as the approval of financial statements, the appointment of auditors, and the election of directors, an EGM is convened to address specific, urgent matters that arise between AGMs.
When is an EGM Convened?
An EGM is typically called in the following situations:
- Urgent Business Matters: When a matter of urgent business cannot wait until the next AGM, such as approval of mergers, amendments to the company’s articles of association, or decisions on substantial transactions.
- Change in Business Strategy: When there is a need to change the strategic direction of the company, which requires shareholder approval.
- Resolution of Disputes: To resolve internal conflicts or disputes among shareholders or directors.
- Legal Compliance: To comply with statutory requirements or regulatory obligations, such as addressing violations or implementing court directives.
Legal Provisions for EGM under Companies Act, 2013
The Companies Act, 2013, governs the convening, conduct, and procedural requirements of an EGM. Here are some key provisions:
- Authority to Call an EGM:
- Board of Directors: As per Section 100(1), the Board of Directors may call an EGM whenever they deem it necessary.
- Requisition by Members: Under Section 100(2), shareholders holding not less than one-tenth of the paid-up share capital carrying voting rights, or in case of a company not having share capital, members holding not less than one-tenth of the total voting power, can request an EGM. The Board must convene the meeting within 21 days of receiving a valid requisition.
- Notice of EGM:
- Content of Notice: Section 101 requires that a notice of the EGM, specifying the place, date, day, and hour of the meeting, along with a statement of the business to be transacted, must be sent to every member, director, and auditor of the company.
- Period of Notice: The notice period is at least 21 clear days. However, an EGM can be called at shorter notice if consent is given by at least 95% of the members entitled to vote at the meeting.
- Quorum for EGM: As per Section 103, the quorum for an EGM is usually two members personally present for private companies and five members for public companies unless the articles of association provide otherwise.
- Chairman of the Meeting: The Chairman of the Board usually presides over the EGM. If the Chairman is not available, the members present may elect a chairperson from amongst themselves.
- Voting and Resolutions:
- Ordinary and Special Resolutions: An EGM may pass ordinary resolutions, requiring a simple majority, or special resolutions, needing at least a three-fourths majority of the votes cast by members present and voting.
- Voting Methods: Voting can be conducted by a show of hands, electronically, or by a poll, depending on the company’s articles and the nature of the resolutions.
- Minutes of EGM: As stipulated in Section 118, minutes of the proceedings must be recorded and signed by the Chairman of the meeting. These minutes are to be maintained at the registered office and made available for inspection by members.
Importance of an EGM
An EGM serves as a vital tool for corporate governance, allowing shareholders to make decisions on significant matters that impact the company’s direction and operations. It provides a platform for transparent decision-making, where shareholders can discuss and vote on crucial issues, thereby ensuring that the interests of all stakeholders are considered.
Conclusion
The conduct of an EGM is governed by the Companies Act, 2013, which ensures that such meetings are held with due regard to legal requirements and corporate governance norms. By adhering to these provisions, companies can make timely and effective decisions on urgent matters, safeguarding the interests of shareholders and maintaining corporate integrity.
Understanding the nuances of calling and conducting an EGM is essential for corporate professionals, directors, and shareholders to ensure that the company’s operations remain compliant with legal standards and responsive to the needs of its stakeholders.
Format of a Minutes of the Extraordinary General Meeting
Name of the Company: XXXXXXXXXXXXX Private Limited
Corporate Identification Number (CIN): XXXXXXXXXXX
Registered Office: XXXXXXXXXXXXXXXXXX
Email Address: XXXXXXXXXX
Date: XXXXXXXXXXXXX
Time: XXXXXXXX
Venue: XXXXXXXXXXXXXX
Pursuant to Section 101 of the Companies Act, 2013, an Extraordinary General Meeting (“EGM”) of XXXXXXXXXXXXXXXXXXXX Private Limited (the “Company”) was duly convened on XXXXXXXXXX at XXXXXXXX. at the XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. The meeting was called on short notice via email dated XXXXXXXXXXX 2024, with the consent of the shareholders as required under the Companies Act, 2013. No objections were raised by any shareholder regarding the short notice.
Agenda of the Meeting:
1. To consider and approve decisions on the following matters:
- Settlement of outstanding payments to broadcasters and discussion of matters pending before the Telecom Dispute Settlement and Appellate Tribunal (TDSAT), New Delhi, along with any other pending legal matters.
- Settlement of outstanding Tax Deducted at Source (TDS).
- Review of the Company’s current assets and liabilities.
2. To discuss any other business with the permission of the Chair, subject to compliance with the Companies Act, 2013.
Election of Chairman
Mr. XXXXXXXXX proposed the appointment of Mr. XXXXXXXXXX as the Chairman of the EGM. The proposal was seconded by XXXXXXXXXXX. As no other nominations were received, Mr. XXXXXXXXXXXXX was unanimously elected as the Chairman of the meeting.
The Chairman, Mr. XXXXXXXXXXXXXXX, took the chair and commenced the meeting as per the provisions of the Companies Act, 2013.
Proceedings and Resolutions Passed:
Item No. A.1 (i):
The Chairman initiated the discussion on the settlement of outstanding payments to broadcasters. After detailed deliberation, it was resolved that the Company shall settle the outstanding dues by liquidating certain assets and collecting any outstanding payments from Local Cable Operators (LCOs). The resolution was passed by a show of hands.
- Number of members voting in favor: [To be filled]
- Number of members voting against: [To be filled]
- Number of members abstaining from voting: [To be filled]
- Total number of members present: [To be filled]
Resolution passed with [Percentage]% votes in favor.
Item No. A.1 (ii):
The Chairman proceeded with the discussion on the cases pending before the Telecom Dispute Settlement and Appellate Tribunal (TDSAT), New Delhi. It was noted that based on the Board and Executive resolutions dated XXXXXXXXXX and XXXXXXXXXXXXXXXX, there were no objections to LCOs shifting their Set Top Boxes (STBs) and utilizing the NSTV (CAS) software to ensure smooth business operations. Therefore, the members unanimously resolved to withdraw all pending cases against the Company as the matters were deemed infructuous. The cases to be withdrawn include:
- ………………
- Number of members voting in favor: [To be filled]
- Number of members voting against: [To be filled]
- Number of members abstaining from voting: [To be filled]
- Total number of members present: [To be filled]
Resolution passed with [Percentage]% votes in favor.
Item No. A.2:
The meeting then addressed the outstanding Tax Deducted at Source (TDS) payments. After discussions, it was resolved that the Company would clear the outstanding TDS by selling certain assets and collecting any due payments from LCOs. The resolution was passed by a show of hands.
- Number of members voting in favor: [To be filled]
- Number of members voting against: [To be filled]
- Number of members abstaining from voting: [To be filled]
- Total number of members present: [To be filled]
Resolution passed with [Percentage]% votes in favor.
Item No. A.3:
The Chairman then opened the floor for a review of the Company’s assets and liabilities. It was brought to the attention of the members that the Board of Directors had failed to present the Company’s accounts for the past two years and had not convened an Annual General Meeting (AGM) during this period. It was resolved that the Board of Directors be directed to produce the books of accounts and convene the AGMs for the past years within 15 days. Failure to comply would result in legal action under the Companies Act, 2013. The resolution was passed by a show of hands.
- Number of members voting in favor: [To be filled]
- Number of members voting against: [To be filled]
- Number of members abstaining from voting: [To be filled]
- Total number of members present: [To be filled]
Resolution passed with [Percentage]% votes in favor.
Item No. B:
The Chairman inquired if there were any other matters to be discussed. As no additional topics were raised by the members, the Chairman declared the EGM closed.
The meeting concluded with the Chairman signing the minutes of the meeting, along with the resolutions passed, affixed with the Company’s seal.
For XXXXXXXXXXX Private Limited
XXXXXXX
Chairman of the EGM
Signature with Seal
Attendance Sheet of the Extraordinary General Meeting
Company: XXXXXXXXXXXXXXXXXX Private Limited
CIN: XXXXXXXXXXXXXXXXX
Date of Meeting: XXXXXXXXX
Venue: XXXXXXXXXXXXXX
Time: XXXXXXXX
Below is the attendance sheet of the shareholders present at the Extraordinary General Meeting held on XXXXXXXXXX:
| Serial Number | Name of Shareholder | Signature |
Note: The above-mentioned shareholders attended the Extraordinary General Meeting in person and have affixed their signatures against their names as a confirmation of their presence at the meeting.
For XXXXXXXXXXXXXXX Private Limited
XXXXXXXXXXXX
Chairman of the EGM
Signature with Seal
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