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Central University of South Bihar

Research Work on Company Law-II


Research Title:
Significance of Meetings in the effective
governance of the Companies with special
reference to AGM & EGM under
Companies Act, 2013.

Authored by: Robin Vincent


Enroll. Id: CUSB1513125037
Programme: B.A.LL.B (Hons.)
Semester: 8th semester
Paper: Company law-II
Course Instructor: Dr. P.K. Das
Statement of the Research Problem:
A company is an association of several persons. As, an artificial person in the eye of law,
individual natural person takes up its entire works. The management of the company is
necessarily left to the discretion of the directors. The directors of the company may easily get
the benefit of working for the management of the company. The concept of holding general
meeting is to keep a check on the management, which must not work detriment to the interest
of the shareholders as well as the members of the company. The present study is intended to
focus upon the role of general meetings in the effective functioning and governance of the
country. With special reference to the Annual General Meetings and Extra-Ordinary general
meetings. The question is whether meetings is a forum for the directors to present speeches to
shareholders or for shareholders to ask questions and debate? So this research work analyses
how general meetings such as AGM or EGM are effective in the governance of the company.

Research Methodology:

This research work is based on doctrinal method of research. This methodology emphasises
on secondary research methodology and case study approach. The whole paper is made with
the use of secondary source. For this topic, the researcher has opted for Descriptive and
Explanatory type of study as in this topic; the researcher is providing the descriptions of the
existing facts. The following secondary sources of data have been used in the project:
1. Books
2. Websites
3. Articles
4. Statute
5. Rules
6. Secretarial standards.

Hypothesis:

Following propositions would be the outcome of the research work:

• General Meetings play a vital role in the functioning and governance of a company.
• The primary purpose of a Meeting is to ensure that a company gives reasonable and
fair opportunity to those entitled to participate in the Meeting to take decisions as per
the prescribed procedures.

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• The concept of holding general meeting is to keep a check on the management, which
must not work detriment to the interest of the shareholders as well as the members of
the company.
• Virtual general meetings of companies are the requirement of the future.

Literature Review:
Books:

(i) Dr. G.K. Kapoor & Dr. Sanjay Dhamija, Comany Law, Taxmann, 21st Edn. (2018).
(ii) Avatar Singh, Company Law, 17th Edition, Eastern Book Company, (2018).

Statutes and Rules:

(i) Company Law Act, 2013.

(ii) Companies (Management and Administration) Rules, 2014.

(iii) Secretarial Standard on General Meetings (SS-2) issued by ICSI.


(iv) Guidance note on General Meetings (Based on Revised SS-2 effective from October 1st ,
2017).

Articles:

(i) Slaughter and May ‘The Law of Difficult Meetings.’ (February 2013).

(ii) Nicholas Apostolides, ‘Exercising Corporate Governance at the Annual General


Meeting’, in Corporate Governance: The International Journal of Business in Society.

(iii) Vibha Sahay, Importance of General Meeting in the Conduct of the Company Business.

Websites:
(i) https://www.tutorialspoint.com/business_law/business_law_company_meetings.htm.(Last
Visited 14 Apr. 2019)
(ii) https://www.newcompanyregistrationindia.com/annual-general-meetings.php.
(Last Visited 14 Apr. 2019)
(iii) https://www.caclubindia.com/articles/annual-general-meeting-under-companies-act-
2013-20594.asp. (Last Visited 14 Apr. 2019)
(iv) http://www.newcompanyregistrationindia.com/extraordinary-general-meetings.html.
( Last Visited 14 Apr. 2019)
(v) https://accountlearning.com/agm-egm-objectives-notice-convening-of-meeting/.
( Last Visited 14 Apr. 2019)
(vi) https://icsi.edu/media/portals/86/Geeta_Saar_37_Extraordinary_General_Meeting.pdf.
( Last Visited 14 Apr. 2019)
(vii) https://keydifferences.com/difference-between-annual-general-meeting-agm-and-
extraordinary-general-meeting-egm.html. (Last Visited 14 Apr. 2019)

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Table of Cases:

(i) Anuradh Mukherjee v. Incab Industries Ltd., (1996) 4 Comp LJ482 (CLB).

(ii) Dalmia Cement (Bharat) Ltd. v. Registrar of Joint Stock Companies, AIR 1954 Mad 276.

(iii) Smyth v. Darley, (1849) 2 HL Cas 789.

(iv) Balwant Singh Sethi v. Zoarwar Singh, (1988) 63 Comp Cas 310 (Bom).

(v) Life Insurance Corporation of India v. Escorts Ltd, (1986) 59 Com Cases 548.

(vi) Cricket Club of India v. Madhav L. Apte, (1975) 45 Com Cases 574.

(vii) A.D. Chaudhary v. Mysore Paper Mills Ltd. (1976) 46 Comp. Cas. 639 (Kar).

Chapterisation of the Research Work:

1. Introduction and Significance of Company Meetings

2. Types of General Meetings

3. Annual General Meeting (AGM)

4. Extra-Ordinary General Meeting (EGM)

5. Comparative Study of AGM and EGM

6. Conclusion

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Introduction and Significance of Company Meetings
A meeting may be generally defined as a gathering or assembly, getting together of a number
of persons for transacting any lawful business, for entertainment or the like 1. A company is
considered as a legal entity separate from its members in the eyes of law. All the affairs of
the company are practically carried out by the board of directors. The board of directors of a
company carries out these affairs within the limitations of their powers, as invoked by the
articles of association of the company. The directors also exercise certain powers of their
own with the consent of other members of the company.

The consent of the other members is ensured at the general meetings held by the company.
Any mistakes committed by the board are rectified by the shareholders (who are also
considered as owners of the company) at the meetings of the company.

• The shareholders’ meetings are conducted for the shareholders to give their verdict
on the decisions and steps taken by the board of directors.

• Meetings are a crucial part of the management of a company as mentioned in the


Companies Act, 2013.

• Meetings enable the shareholders to know the ongoing proceedings of the company
and allow the shareholders to deliberate on certain issues.

• There are various types of meetings held by a company.

• Various criteria must be fulfilled for the calling, convening and conduct of the
meetings. 2

The Companies Act, 2013 and its respective rules mandates holding of Meetings at specified
intervals and also prescribes related rules for the same. Such mandate is in recognition of the
fact that meetings play a vital role in the functioning and governance of a company. The
primary purpose of a Meeting is to ensure that a company gives reasonable and fair
opportunity to those entitled to participate in the Meeting to take decisions as per the
prescribed procedures. A company, being an artificial person, can, in respect of matters to be
decided at General Meeting, take such decisions through its Members by way of Resolutions
passed at validly held Meetings. It is the principal forum in which directors account to

1
Dr. G.K. Kapoor & Dr. Sanjay Dhamija, Comany Law, Taxmann, 21st Edn. 2018.
2
https://www.tutorialspoint.com/business_law/business_law_company_meetings.htm. (Last Visited 14 Apr.
2019)

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shareholders for their stewardship of the company. It is not simply a forum for the directors
to present speeches to shareholders, but for shareholders to ask questions and debate3.
Meetings of Members are known as General Meetings and determining what constitutes such
validly held Meeting is of utmost importance. 4
At a sociological level, it has been recognised by Apostolides and Boden that the AGM offers
a stage for ‘power plays’ where there is a ‘discipline of the meeting [which] results in some
form of a governance control over companies.’ 5 Meetings are also the place for shareholders
to exercise their fundamental rights to vote on important resolutions such as remuneration for
directors. General Meetings can be broadly categorised as follows:
(i) Annual General Meeting (AGM)
(ii) Extra-Ordinary General Meeting (EGM)
(iii) Meeting of a Class of Members
(iv) Meetings of Debenture Holders, Creditors etc.
(v) Other Meetings.

The following conditions must be satisfied for a meeting to be called a valid meeting 6:

(1) It must be properly convened. The persons calling the meeting mustbe authorised to do
so;
(2) Proper and adequate notice must have been given to all those entitled to attend;
(3) The meeting must be legally constituted. There must be a chairperson. The rules of
quorum must be maintained and the provisions of the Companies Act, 1956 and the articles
must be complied with; and
(4) The business at the meeting must be validly transacted. The meeting must be conducted in
accordance with the regulations governing the meetings.

This research work analyses the significance of meetings in the governance of the companies
with reference to only AGM and EGM.

3
‘The Law of Difficult Meetings.’ Slaughter and May (February 2013), page 1.
4
Guidance note on General Meetings (Based on Revised SS-2 effective from October 1st , 2017).
5
Nicholas Apostolides, ‘Exercising Corporate Governance at the Annual General Meeting’, in Corporate
Governance: The International Journal of Business in Society, 10 (2), pages, 140-149.
6
Vibha Sahay, Importance of General Meeting in the Conduct of the Company Business.

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Types of General Meetings

General Meetings can be broadly categorised as follows 7 :

(i) Annual General Meeting – Every company is required to hold, during every Calendar
Year, a Meeting of its Members called the Annual General Meeting. The importance of the
Annual General Meeting arises out of the nature of business transacted at this Meeting.
Broadly there are two types of business that are transacted at an Annual General Meeting –
Ordinary Business and Special Business. Annual General Meetings provide Members with an
opportunity to collectively discuss the affairs of the company and to exercise their ultimate
control over the management of the company. If a company defaults in any year in holding its
Annual General Meeting, any Member of the company has a statutory right to approach the
National Company Law Tribunal (Tribunal) to call or direct the company to call an Annual
General Meeting.

(ii) Extra-Ordinary General Meeting – A company may also hold any other Meeting of its
Members called an Extra-Ordinary General Meeting, as and when required or at the
requisition of the Members. An Extra- Ordinary General Meeting is convened for transacting
Special or Urgent business that may arise in between two Annual General Meetings. All
business transacted at an Extra-Ordinary General Meeting are called Special Business.

(iii) Meeting of a Class of Members – Such Meetings are held to transact business by way of
passing Resolutions which only bind the Members of the concerned class. Only Members of
that class can attend such Meetings and speak as well as vote thereat, e.g. Meetings of holders
of preference shares. Such Meetings are required to be convened when it is proposed to vary
the rights of the holders of a particular class of shares. Provisions which govern General
Meetings aremutatis mutandis applicable to such Meetings.

(iv) Meetings of Debenture Holders, Creditors etc. –- Such Meetings are held to transact
business by way of passing Resolutions which bind the debenture holders or creditors, as the
case may be, of the company. The debenture holders or creditors, as the case may be, can

7
Guidance note on General Meetings (Based on Revised SS-2 effective from October 1st , 2017).

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attend such Meetings and speak as well as vote thereat. Provisions which govern General
Meetings are mutatis mutandis applicable to such Meetings.

(v) Other Meetings – In addition to the abovementioned Meetings, a company may also hold
Meetings of its Members, debenture holders or creditors under the directions of the Court or
the Tribunal or any other authority.

Members of a company can exercise their powers and can bind the company when they act as
a body at a validly convened and held Meeting. They should act collectively and not
individually. A Member or shareholder, irrespective of his shareholding, cannot bind a
company by his individual act.

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Annual General Meeting (AGM)
An Annual General Meeting (AGM) is a meeting of the members/shareholders that every
company is mandatorily required to hold every financial year. An AGM is held every year to
carry out certain annual appointments etc. and to inform the members of the previous and
future activities of the company. It provides the shareholders and partners with an opportunity
to receive copies of the company's accounts as well as reviewing fiscal information for the
past year and enables them to know the directions the business will take in the future 8.
As per Section 96 of the Companies Act, 2013, every company other than a One Person
Company shall in each year hold in addition to any other meetings, a general meeting as its
annual general meeting. The Company shall specify the meeting as such in the notices calling
AGM. The 2013 Act states that the first AGM should be held within nine months from the
date of closing of the first financial year of the company, whereas the 1956 Act requires the
first annual general meeting to be held within 18 months from the date of incorporation 9.
Then no meeting will be necessary for the year of incorporation. This means, for a company
incorporated on 1st day of January 2015, the first financial year shall be closed on 31st day of
March 2016 and Annual General Meeting should be convened on or before 31st day of
March 2016. However, for a company incorporated on 31st day of December 2014, the first
financial year shall be closed on 31st day of March 2015 and Annual General Meeting should
be convened on or before 31st day of December 2015 10.
After the holding of First AGM, every year one AGM must be held every year. There shall
not be a gap of more than 15 months between two AGMs. In case of any default in holding
the AGM in any year, any member of the company may approach the Tribunal for suitable
directions 11. The tribunal can give any ancillary or consequential directions which it thinks
expedient in relation to the calling and conducting of the meeting. A meeting held in
pursuance of this order will be deemed an AGM of the company 12.
In the case of subsequent AGM, the registrar has been given the power, for any special
reason, to extend the time for holding an AGM for a period of only three months. But the
time for holding the first AGM of a company is never extended 13.The meeting should be

8
https://www.newcompanyregistrationindia.com/annual-general-meetings.php. (Last Visited 14 Apr. 2019)
9
Section 96, Companies Act, 2013.
10
https://www.caclubindia.com/articles/annual-general-meeting-under-companies-act-2013-20594.asp. (Last
Visited 14 Apr. 2019)
11
Guidance note on General Meetings (Based on Revised SS-2 effective from October 1st , 2017).
12
Section 97(2), Anuradh Mukherjee v. Incab Industries Ltd., (1996) 4 Comp LJ482 (CLB).
13
Proviso to Section 96(1)(c). Dalmia Cement (Bharat) Ltd. v. Registrar of Joint Stock Companies, AIR 1954
Mad 276.

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held during business hours, that is, between 9 am and 6 pm, on any day which is not a public
holiday14. One of the changes in the 2013 Act compared to the 1956 Act is that annual
general meeting can now be held on all days including on Sundays and Public holidays but
cannot be held on National holidays as declared by the Government. The National Holidays
are 15th August- Independence Day, 26th January- Republic Day and 2nd October- Gandhi
Jayanti Day15. The AGM must be held at (i) the registered office of the Company or (ii) At
some other place within the city, town or village in which the registered office of the
company is situated.
The importance of the Annual General Meeting arises out of the nature of business transacted
at this Meeting. Broadly there are two types of business that are transacted at an Annual
General Meeting – Ordinary Business and Special Business. At an Annual General Meeting,
consideration of financial statements & consolidated financial statements, reports of the
Board of Directors and the auditors, declaration of dividend, appointment of Directors in
place of those retiring and approval or ratification of appointment of the Auditors and fixing
their remuneration are Ordinary Business. Any other item of business is referred to as Special
Business and may also be transacted at an Annual General Meeting 16.
The AGM to be a valid meeting should be called by a proper authority. Obviously the only
proper authority is the Board of directors. Another requirement of a valid AGM is that a
proper notice of the meeting of the company should be given to the members. Notice should
be given to every member of the company. Deliberate omission to give notice to a single
member may invalidate the meeting 17, although an accidental omission to give notice to or
non receipt of it by a member will not be fatal [101(4)]. Notice should be in writing and must
be given 21 days before the date of the meeting. “21 days” are to be computed from the date
of receipt of the notice by the members and the notice shall be deemed to have been received
at the expiration of 48 hours from the time of posting 18.
Unless the articles of the company provide for a larger number, the quorum for an AGM shall
be as follows: In case of Public company: Minimum 5 members personally present and in the
case of any other company: Minimum 2 members must be personally present within half an
hour from the time for holding the meeting. If within half an hour from the time of a meeting

14
As so declared by the Central Government [Explanation to Section. 96].
15
https://www.caclubindia.com/articles/annual-general-meeting-under-companies-act-2013-20594.asp. ( Last
Visited 14 Apr. 2019)
16
Guidance note on General Meetings (Based on Revised SS-2 effective from October 1st , 2017).
17
Smyth v. Darley, (1849) 2 HL Cas 789.
18
Section 101, Balwant Singh Sethi v. Zoarwar Singh, (1988) 63 Comp Cas 310 (Bom).

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a quorum is not present the meeting is automatically adjourned to re-assemble on the same
day in the next week.
The failure to call an AGM either generally or in pursuance of the order of the Tribunal is an
offence punishable with fine. The penalty is imposed upon the company as well as every
officer “who is in default”. The fine may extend to 1 lakh rupees and in the case of a
continuining default, with a further fine which may extend to 5000 rupees for every day
during which such default continues 19.
AGM is an important institution for the protection of shareholders of a company. The
ultimate control and destiny of a company should be in the hands of it shareholders. It is,
therefore, desirable that the shareholders should come together once in a year to review the
working of the company. This meeting affords that opportunity. It is at this meeting that some
of the directors will retire and come up for re-election and shareholders will be able to
exercise real control by “refusing to re-elect a director of whose action and policy they
disapprove”. Again, auditors retire at this meeting enabling the shareholders to consider
whether they should be re-appointed or replaced. Dividends are declared at this meeting.
Chairman delivers a speech listing the advances of the company during the year. Directors
have to present annual accounts for the consideration of the shareholders. A failure to present
the accounts is a punishable offence. The shareholders can ask any questions relating to the
accounts or affairs of the company 20. Hence, AGM is an important instrument in the effective
governance of the company.

19
Section 99, Companies Act, 2013.
20
Avatar Singh, Company Law, 17th Edition, Eastern Book Company, (2018).

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Extra-Ordinary General Meeting (EGM)
An Extraordinary General Meeting (EGM) is a meeting of the shareholders of a company
which is not an AGM. When certain urgent issue arises in relation to the working of the
company which requires the input of the members and is too serious or urgent to wait until
the next AGM, an EGM is held. Members and/or shareholders must be informed of the
purpose of the EGM so that they can prepare themselves to discuss and exercise intelligent
judgment over the matters under consideration 21.
The objective of holding an EGM is to discuss any matter of urgent importance which cannot
be postponed till the next Annual General Meeting. The meeting may be held to discuss the
following special businesses 22:
i. Alteration of Memorandum of Association
ii. Change in the Articles of Association
iii. Reduction of share capital
iv. Decisions on mergers or acquisitions
v. To prevent a hostile takeover
vi. To prevent oppression and mismanagement of the company’s affairs.
vii. Issue of right shares; and
viii. Increase in the remuneration of the managing directors, whole time directors etc.

Sub-section (1) of section 100 empowers the board of directors to call extraordinary general
meeting as and when it is deemed necessary. The board may call such extraordinary meeting
depending upon the exigencies of the conduct of the business of the company. The Extra
Ordinary General Meeting of the Company, other than of the wholly owned subsidiary of a
company incorporated outside India, shall be held at a place within India 23.
According to sub-section (2) of section 100, the board is under obligation to call
extraordinary general meeting on the requisition made by the following number of members:
In the case of company having share capital, Member(s) holding on the date of receipt of the
requisition 10% or more of the paid up share capital carrying voting rights in regard to the
subject matter of the resolution which it is intended to be proposed In the case of company
not having share capital, Member(s) holding on the date of receipt of the requisition 10% or
more of the voting power in regard to the subject matter of the resolution which it is intended
21
http://www.newcompanyregistrationindia.com/extraordinary-general-meetings.html. ( Last Visited 14 Apr.
2019)
22
https://accountlearning.com/agm-egm-objectives-notice-convening-of-meeting/. ( Last Visited 14 Apr. 2019)
23
Inserted by the Companies (Amendment) Act, 2017.

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to be proposed. A single shareholder may also file the requisition for convening the Meeting
provided that he has the requisite voting rights or voting power as per Section 100 of the Act.

Section 100 does not distinguish between a requisitionist being a natural or an artificial
person. Therefore, an artificial person may also submit the requisition with the company.
Thus, in case a body corporate is a Member of another company, it can file the requisition for
convening a Meeting if it holds the required voting rights or voting power. The requisitionists
shall set out the matters for the consideration of which the meeting is to be called on the
requisition. The requisition shall be signed by the requisitionists and sent to the registered
office of the company 24.
Regarding the nature of the right of shareholders, it was held in Life Insurance Corporation of
India v. Escorts Ltd 25, that “every shareholder of a company has the right, subject to
statutorily prescribed procedural and numerical requirements, to call an extraordinary general
meeting in accordance with the provisions of the Companies Act. He cannot be restrained
from calling a meeting and he is not bound to disclose the reasons for the resolutions
proposed to be moved at the meeting nor are the reasons for the resolutions subject to judicial
review.”
The requisition to call an Extra-Ordinary General Meeting should be in writing or through
electronic means [Rule 17(1) of the Companies (Management and Administration)
Rules,2014].Sub-section (4) of section 100 casts a duty on the board to call the extraordinary
general meeting within 21 days from the date of receipt of a valid requisition. Such meeting
shall be convened on a day not later than 45 days from receipt of such requisition. While
interpreting the word “valid”, it was held in Cricket Club of India v. Madhav L. Apte 26, “The
word or the adjective “valid” in section 169 has no reference to the object of the requisition
but rather to the requirements in that section itself. If these requirements indicated in the
earlier part of the section are satisfied, then the requisition deposited with the company must
be regarded as a valid requisition on which the directors of a company must act.”
The Board cannot reject a requisition as invalid, except when the requisitionists do not fulfill
the eligibility criteria stipulated under Section 100 of the Act. However, it has been held that
the Board is within its rights to refuse to call and hold an Extra-Ordinary General Meeting on

24
Guidance note on General Meetings (Based on Revised SS-2 effective from October 1st , 2017).
25
(1986) 59 Com Cases 548.
26
(1975) 45 Com Cases 574.

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the requisition of Members where an order of injunction restraining the company from
holding any Meeting is in force 27.
In case the board fails to call the extraordinary general meeting within 21 days or convenes a
meeting later than 45 days from the receipt, the requisitionists may convene and hold
extraordinary general meeting within 3 months from the date of requisition. Sub-section (5)
of section 100 provides that the requisitionists shall call and hold the meeting in the same
manner as called and held by board. Such meeting shall comply with all the requirements of
the Act and Secretarial Standard-2.
The notice of the meeting by the requistionists shall be given to all members whose names
appear in the Register of members of the company. Rule 17(7) of the Companies
(Management and Administration) Rules, 2014 provides that if the Meeting is not convened,
the requistionists shall have a right to receive list of members together with their registered
address and number of shares held and the company concerned is bound to give a list of
members together with their registered address made as on twenty first day from the date of
receipt of valid requisition together with such changes, if any, before the expiry of the forty-
five days from the date of receipt of a valid requisition. The Board has to provide the
requisitionists with all the relevant information viz. registered email addresses of members,
number of shares held by them etc. from the Register of Members.
Such notice shall specify the place, date, day and hour of the meeting and shall contain the
business to be transacted at the meeting. The provisions of sub-section (2) of section 114 are
required to be complied with in case of special resolutions. Explanatory statement need not
be annexed to the Notice of an Extra-Ordinary General Meeting convened by the
requisitionists and the requisitionists may disclose the reasons for the Resolution(s) which
they propose to move at the Meeting. There is, however, no bar on the addition of an
Explanatory Note by the Board in order to elucidate its position, in any manner, with respect
to the proposals contained in the requisition 28.
The notice shall be signed by all the requisitionists or by a requisitionists 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 mode of delivery of notice is

27
A.D. Chaudhary v. Mysore Paper Mills Ltd. (1976) 46 Comp. Cas. 639 (Kar).
28
Rule 17, Companies (Management and Administration) Rules, 2014.

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speed post or registered post or through electronic mode. Any accidental omission or non-
receipt shall not invalidate the proceedings of the meeting 29.
Where, the requisitionists call a meeting due to failure of the board to call the meeting,
reasonable expenses incurred by the requisitionists in convening the meeting shall be
reimbursed by the company. The expenses so reimbursed shall be deducted from any fee or
other remuneration under section 197 payable to directors who were in default. Section 197 is
not applicable to a private company. Hence, such expenses may be deducted from any
remuneration or other entitlements payable to the directors 30.
Unless the articles of the company provide for a larger quorum, the following number of
members shall constitute a valid quorum: In the case of public company: five members
personally present and in the case of any other company: two members personally present. If
within half an hour from the time appointed for holding a meeting of the company, a quorum
is not present, the meeting, if called upon the requisition of members, shall stand dissolved.
In any other case, the meeting shall stand adjourned to the same day in the next week, at the
same time and place, or to such other day and at such other time and place as the Board may
determine. If at the adjourned meeting also a quorum is not present within half an hour from
the time appointed for holding the meeting, the members present shall be a quorum 31.

29
https://icsi.edu/media/portals/86/Geeta_Saar_37_Extraordinary_General_Meeting.pdf. ( Last Visited 14 Apr.
2019)
30
Ibid.
31
http://www.newcompanyregistrationindia.com/extraordinary-general-meetings.html. (Last Visited 14 Apr.
2019)

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Comparative Study of AGM and EGM
On comparatively analysing the provisions of the Companies Act, 2013 and Companies
(Management and Administration) Rules, 2014, with reference to AGM and EGM, it can be
concluded that the substantive provisions and procedural requirements regarding both the
general meetings are same. However, the following differences exist between the two types
of general meetings. The points presented here, explains the differences between annual
general meeting (AGM) and extraordinary general meeting (EGM) 32:

1. An Annual General Meeting (AGM) is the meeting which should be organised by the
company in each calendar year, to discuss various business matters. On the other
extreme, an Extraordinary General Meeting (EGM) is any meeting other than the
AGM in which urgent business concerning the Company are discussed.
2. The first Annual General Meeting (AGM) must be convened not more than nine
months from the close of the financial year. Conversely, there is no such requirement
in the case of Extraordinary General Meeting (EGM).
3. Both ordinary business and special business are transacted at AGM, whereas only
special business is transacted at EGM.
4. An AGM should be conducted on any day other than a national holiday, in business
hours only. As against, an EGM can be carried out on any day including national
holiday, and anytime during a day.
5. When Annual General Meeting (AGM) is not called within the stipulated time,
penalty up to Rs. 1,00,000 and Rs. 5000 per day is imposed. In contrast, no penalty is
prescribed as per law for not calling an Extraordinary General Meeting (EGM).
6. While an AGM is called by the board only and on request by the tribunal, EGM can
be summoned by Board, Board on the requisition of shareholders, requisitionists or
tribunal.
7. The Annual General Meeting (AGM) can be conducted at (i) the registered office of
the Company or (ii) At some other place within the city, town or village in which the
registered office of the company is situated. On the other hand, Extra Ordinary
General Meeting (EGM) of the Company, other than of the wholly owned subsidiary
of a company incorporated outside India, shall be held at a place within India.

32
https://keydifferences.com/difference-between-annual-general-meeting-agm-and-extraordinary-general-
meeting-egm.html. (Last Visited 14 Apr. 2019)

Page | 16
8. If within half an hour from the time appointed for holding a meeting of the company,
a quorum is not present, the meeting, if called upon the requisition of members
(EGM), shall stand dissolved. In any other case, (AGM) the meeting shall stand
adjourned to the same day in the next week, at the same time and place, or to such
other day and at such other time and place as the Board may determine.

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Conclusion
A company is an association of several persons. Decisions are made according to the view of
the majority. Various matters have to be discussed and decided upon. These discussions take
place at the various meetings, which take place between members and between the directors.
Needless to say, the importance of meetings cannot be under-emphasized in case of
companies. As, an artificial person in the eye of law, individual natural person takes up its
entire works. The directors of the company may easily get the benefit of working for the
management of the company. The concept of holding general meeting is to keep a check on
the management, which must not work detriment to the interest of the shareholders as well
as the members of the company. A general meeting discloses all the important aspects and
maintains a clear balance between the directors, shareholders and members of the company.
The Companies Act, 2013 and its respective rules mandates holding of meetings at specified
intervals and also prescribes related rules and procedures for the same. Such mandate is in
recognition of the fact that meetings play a vital role in the functioning and governance of a
company. The primary purpose of a Meeting is to ensure that a company gives reasonable
and fair opportunity to those entitled to participate in the Meeting to take decisions as per the
prescribed procedures. It is the principal forum in which director’s account to shareholders
for their stewardship of the company. It is not simply a forum for the directors to present
speeches to shareholders, but for shareholders to ask questions and debate. Meetings are the
place for shareholders to exercise their fundamental rights to vote on important resolutions
such as remuneration for directors. The importance of the meeting cannot be overlooked in
case of companies. It regulates the conduct of the company so as to benefit the entire
individual involved to form a company. While it is beyond doubt that the general meetings
are important, but there is a growing feeling that the meeting, in its traditional form, is out of
kilter with modern realities and is sliding into irrelevance. For instance, Baroness Kingsmill
has lambasted AGMs as ‘diminishing in importance’ as they are no longer ‘representative
and effective.’ She tentatively suggests that ‘perhaps it is time to end the big expensive set
piece AGMs and hold virtual meetings online. A virtual meeting involves using existing
technology to allow shareholders to participate in the meeting even remotely in the comfort
of their homes and further it is cost effective.

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