CORPORATE LAW EGM

An extraordinary general meeting (EGM) is a meeting other than a company’s annual general meeting (AGM). An EGM is also called a special general meeting or emergency general meeting.
In most cases, the only time shareholders and executives meet is during a company’s annual general meeting, which usually occurs at a fixed date and time.
However, certain events may require shareholders to come together on short notice to deal with an urgent matter, often concerning company management. The extraordinary general meeting is used as a way to meet and deal with urgent matters that arise in between the annual shareholders' meetings.
An EGM might be called to deal with any of the following:
  • The removal of an executive
  • A legal matter
  • Any matter that can't wait until the next shareholders meeting
Another difference between an annual general meeting and an extraordinary general meeting is that an annual general meeting can only be held during business hours and not on a national holiday, while an EGM can be carried out on any day including holidays. Also, while a company’s board can only call an AGM, an EGM can also be called by the board on the requisition of shareholders, requisitionist, or tribunal.

An Example of an Extraordinary General Meeting

Extraordinary general meetings occur for a variety of reasons, but the meeting is usually called to discuss the potential removal of an executive. In December 2017, the London Stock Exchange (LSE) held an extraordinary general meeting, regarding claims that its chairman, Donald Brydon, pushed out former chief executive Xavier Rolet. Rolet stepped down early in November 2017.
Although some EGMs occur outside of normal business hours, the London Stock Exchange's EGM took place on a non-holiday Tuesday. The motion was sparked by activist investor The Children’s Investment Fund Management (TCI), which had gotten 20.9% votes in favor of removing Brydon. However, the result of the EGM was that Brydon remained in his position.

Section 100 of Companies Act, 2013 Calling of Extra Ordinary General Meeting on requisition

The demand of members to convene a meeting is called requisition. It shall set out the matters for consideration of which the meeting is to be called.
The number of members entitled to requisition a meeting in regard to any matter shall be
1. In case Company having a share capital, members holding at least one tenth of such paid up capital of the capital which carries a right voting in regard to that matter.
2. In case Company not having share capital, members holding at least one tenth of total voting power of all the members who have a right to vote to that matter.
On receipt of requisition the Board of Directors shall proceed to call Extra Ordinary General Meeting within 21 days from the date of the deposit of requisition, on a date, which shall not be later than 45 days of the date of deposit of requisition.
The Board of Directors shall be said to have failed in calling the meeting if:
  • It does not call the meeting within 21 days of the deposit of requisition.
  • It calls the meeting on a day which is later than 45 days from the date of deposit of requisition or
  • It convenes a meeting to transact only a part of the business specified in the requisition.
Where the Board fails to call a meeting, the meeting may be called by the requsitionists themselves within a period of 3 months from the date of the deposit of requisition.
Any reasonable expenses incurred by the requsitionists in calling a meeting shall be reimbursed to the requsitionists by the Company and the same so paid shall be deducted from any  fee  or  other remuneration payable to such of the directors who were in default in calling the meeting.
Notice of the meeting
  • Notice shall be given in writing or through electronic mode at least before 21  clear days to the proposed date of extra ordinary general meeting.
  • The notice calling meeting shall specify the place, date, day and hour of the meeting and shall contain the business to be transacted at the meeting.- Requistionists should convene meeting at Registered office or in the same city or town where Registered office is situated. Further such meeting should be convened on any day except national holiday.
  • No explanatory statement as required under section 102 need be annexed to the notice of an extraordinary general meeting convened by the requistionists and the requistionists may disclose the reasons for the resolutions which they propose to move at the meeting.
  • The notice of the meeting shall be given to those members whose names appear in the Register of members of the company withinthree 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.

4. Section 98 of Companies Act, 2013 Calling of Extra Ordinary General Meeting by Tribunal

If for any reason company could not call, hold or conduct meeting. The National Company Law Tribunal may order a meeting of the company to be called, held or conducted in such manner as it thinks fit.
The directions given under this section include that one member of the company present in person or by proxy shall be deemed to constitute a meeting.
The tribunal may do so either on its own motion or on the application of any director of the company or on the application of any member of the company who would be entitled to vote at the meeting.

Calling of extraordinary general meeting
(1) The Board may, whenever it deems fit, call an extraordinary general meeting of
the company.
(2) The Board shall, at 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;
(b) in the case of a company not having a share capital, such number of members
who have, on the date of receipt of the requisition, not less than one-tenth of the total
voting power of all the members having on the said date a right to vote,
call an extraordinary general meeting of the company within the period specified in subsection (4).
(3) The requisition made under sub-section (2) shall set out the matters for the
consideration of which the meeting is to be called and shall be signed by the requisitionists
and sent to the registered office of the company.
(4) If the Board does not, within twenty-one days from the date of receipt of a valid
requisition in regard to any matter, proceed to call a meeting for the consideration of that
matter on a day not later than forty-five days from the date of receipt of such requisition, the
meeting may be called and held by the requisitonists themselves within a period of three
months from the date of the requisition.
(5) A meeting under sub-section (4) by the requisitionists shall be called and held in
the same manner in which the meeting is called and held by the Board.
(6) Any reasonable expenses incurred by the requisitionists in calling a meeting under
sub-section (4) shall be reimbursed to the requisitionists by 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.

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