Section 100 of Companies Act. Calling of extraordinary general meeting

“(1) The Board may, whenever it deems fit, call an extraordinary general meeting of the company.

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the company and the sums so paid shall be deducted from any fee or other remuneration under section 197 payable to such of the directors who were in default in calling the meeting.”

What’s EGM (Extra-Ordinary General Meeting)?

Generally, as per section 96 of the Companies Act, 2013 there shall be a ‘Annual General Meeting’, the annual general meeting likely to held on a fix date that it’s compulsory for the companies to conduct annual general meeting except for the one-person company.

But in annual general meeting there’s discussion on the matter of previous year and the coming year that is a yearly plan that is more likely to be discussed in annual general meeting. But there are many events that cannot be discussed in a annual general meeting as such event may occur after the annual general meeting and those event cannot be put on hold for the next annual general meeting as it will be too long period and which cannot be afforded to entertain such events. For such events there are a meeting arranged where all the shareholders are come along to discuss or entertain such event for the purpose to protect the reputation, dignity, goodwill, or objective of the company which is directly or indirectly beneficial for all the shareholders.

When to call an EGM under section 100 of Companies Act?

That such event which requires urgent attention of all the shareholders can be:

• A legal matter: There can be a case filed against the company in a court or tribunal, and such matter shall be informed to every shareholder and a discussion on a legal matter is urgent dealing as it can harm the reputation of the company.

• Removal of Executive: That there is a proposal put up for the removal of any specific executive and such event may lead to the voting procedure which shall require the presence of every shareholder, in case of absence of any of the shareholder such shareholder can join in electronic mode if not possible to give physical presence.

• Other matter needs urgent attention: There are many such events which cannot be put up on hold to be deal in next shareholder meeting. Such event shall be entertained on urgent basis as it may lead to crisis or harm the work culture of the company.

Notification pertaining to EGM

An Extra-Ordinary General Meeting most likely to held on a notice of short period that is urgent basis and every shareholder of the company shall be informed about the event to be discussed in that meeting in the notice given to all the shareholders.

The main aim of an EGM is to decide on important matters concerning the company and shareholders, like changes to articles, major transactions, director appointments, capital structure, and financial statement approval. EGMs are essential for transparency, accountability, and shareholder involvement in decision-making.

In terms if a company is having share capital, then the members of the company who along holds the one-tenth of the company that is of those paid share capital of the company on the date of receipt of requisition carries the right to vote in meeting on date of receipt of requisition. And in case if such company do not carry the paid-up share capital in that scenario the member who carries one-tenth of voting rights on the date of receipt of requisition has the right to vote calling for extra-ordinary general meeting for the duration specified under S.100(4) of this act. Every company and subsidiary company incorporated inside India shall conduct the extra-ordinary general meeting in India.

Written or electronic notice must be given at least 21 clear days before the proposed date of an extraordinary general meeting. The notice must include the location, date, time, and agenda for the meeting. The meeting should take place at the Registered office or in the same city, on a non-national holiday. There is no need for an explanatory statement for such meetings convened by requisitions, who may disclose their reasons for proposed resolutions. The notice should be given to members listed in the Register within three days of the requisition being deposited with the Company. Notification can be delivered by speed post, registered post, or electronically. Failure to notify a member does not invalidate meeting proceedings.

Section 100(4) requires the board to schedule an extraordinary general meeting within 21 days of receiving a valid request. This meeting must take place within 45 days of the initial requisition.

If the board does not call an extraordinary general meeting within 21 days or delays it beyond 45 days, the requisitions can arrange and conduct the meeting within 3 months from the requisition date. The meeting must be held at the registered office or in the same city, on a working day. It was decided that if the registered office is unavailable, the meeting can be held elsewhere. Sub-section (5) of section 100 states the requisitions must follow the same procedures as the board, meeting all requirements of the Act and Secretarial Standard-2.

Penalty & expenses under section 100 of Companies Act

Expenses incurred by the requisitions for convening a meeting where the board has failed to do so shall be reimbursed by the company. These reimbursed expenses will be taken out from the pay of directors who were at fault, as per Section 197, which does not apply to private companies. No penalty is specified for violating this section. So, section 450 will apply. The company and its officers may be fined up to Rs. 10,000 for violating this section, with a daily fine of Rs. 1,000 for ongoing violations. Violations by the company and officers, punishable by fines only, can be settled under section 441.

FAQs

Q. Notice for EGM shall be given before how many days of the meeting?

The minimum time for giving notices to the shareholders for calling of EGM shall be before 21 days not less than that.

Q. When EGM most likely to occur?

When there’s any urgent matter which shall need attention of every member of the company or which can’t be put on hold, such a legal matters & etc.

Q. Where shall a Indian company or subsidiary-company conduct EGM?

Such companies shall conduct the meeting within Indian territory.

Q. Difference between AGM & EGM?

AGM is annual general meeting which is a yearly meeting of the company’s members, where a yearly plan is set out or discussed. On the other hand, EGM is extra-ordinary general meeting which called upon urgent matter and they can be held more than once in a year.

Q. Who has the voting rights on date of receipt of requisition?

Where number of members carries one-tenth paid up share capital in a company having share capital, and if not then the one-tenth of the members carries out of the total voting rights.