Extra-ordinary General Meeting

An Extra-ordinary General Meeting (EGM) is a meeting of a company’s shareholders or members that is called outside the usual timetable of the Annual General Meeting (AGM) to address urgent or important matters. While the AGM is typically held once a year, an EGM can be convened at any time as needed. It is a legal provision in corporate governance that allows shareholders to discuss and decide on issues that require immediate attention and cannot wait until the next AGM.

Purpose of an EGM:

The EGM is generally convened to deal with urgent or exceptional matters that arise between AGMs. The issues discussed at an EGM are usually of a special nature, such as the approval of a major transaction, changes in the company’s structure, or other significant events. Some of the Primary Purposes of an EGM:

• Approval of Special Resolutions:

These are resolutions that cannot be passed at an AGM, such as changes in the company’s articles of association, alterations to the share capital, or major mergers and acquisitions. Special resolutions often require a supermajority of shareholders’ approval.

• Filling Vacant Directorships:

If a director’s position becomes vacant due to resignation, death, or other reasons, an EGM may be called to appoint a new director or to elect members to fill vacancies in the board of directors.

• Amendments to Articles of Association:

Any amendments to the company’s articles of association, which is the internal rulebook governing the company’s operations, typically require approval through a special resolution in an EGM.

• Issuance of New Shares:

If a company wishes to raise additional capital by issuing new shares, this decision might be brought before shareholders in an EGM for approval.

• Changes in Capital Structure:

An EGM may be convened to approve a change in the capital structure, such as the issuance of bonds or preference shares, or the conversion of debentures into equity shares.

Legal Provisions and Requirements for Calling an EGM:

An EGM can be called by the board of directors or, in some cases, by shareholders. The following are common provisions for calling an EGM:

1. Who Can Call an EGM?
   • Board of Directors: The board has the authority to call an EGM at any time when needed.
   • Shareholders: Shareholders holding at least 10% of the paid-up capital (in the case of a company with share capital) or 10% of the total voting rights (in the case of a company without share capital) can request the board to call an EGM. If the board refuses, shareholders can approach the company’s registrar to call the meeting.
   • Court or Tribunal: In certain cases, if the directors fail to call a meeting, a court or tribunal may issue an order to hold an EGM.
2. Notice of Meeting: A formal notice must be sent to all shareholders, clearly stating the time, date, place, and agenda of the meeting. The notice period is generally 21 clear days, although shorter notice can be given if agreed upon by a majority of shareholders.
3. Quorum: A quorum must be present at the EGM for decisions to be valid. The quorum is specified in the company’s articles of association and usually requires a minimum number of shareholders to be present. If a quorum is not met, the meeting may be adjourned to a later date.
4. Voting at EGM: Voting can be done through various means:
   • In-Person Voting: Shareholders present at the meeting can vote directly.
   • Proxy Voting: Shareholders may appoint a proxy to represent them and vote on their behalf.
   • Postal Ballots or E-Voting: In certain cases, shareholders can vote in advance through postal ballots or electronically, which is increasingly popular for ease and accessibility.

Procedure for Holding an EGM:

• Preparation:

The company’s management prepares the agenda, draft resolutions, and other necessary documents related to the matters to be discussed. Shareholders must receive the notice along with the details of the resolutions to be voted on.

• Notice:

A formal notice is sent to all members as per the company’s rules. This notice will include the date, time, location, agenda, and any other relevant details for the meeting.

• Meeting:

On the day of the EGM, the chairman or a designated person presides over the meeting, explaining the items on the agenda and guiding the discussions. Shareholders have the opportunity to ask questions, discuss the proposed resolutions, and vote on them.

• Resolutions and Voting:

Voting may be done either by a show of hands or electronically, and the results of the voting are recorded in the minutes. A resolution is passed based on the votes, and the decisions taken are implemented accordingly.

• Minutes of the Meeting:

As with any official meeting, the minutes of the EGM are prepared and signed by the chairman. These minutes are important records of the decisions taken and are shared with shareholders.