Difference Between Annual General Meeting vs. Extraordinary General Meeting

Difference Between Annual General Meeting vs. Extraordinary General Meeting: In corporate governance, general meetings play a pivotal role in facilitating communication between a company's management and its shareholders. Among the most important meetings in the corporate world are the Annual General Meeting (AGM) and the Extraordinary General Meeting (EGM). These meetings provide platforms for shareholders to make crucial decisions about a company's future. Understanding the differences between these two types of meetings is essential for Company Secretaries (CS), as it helps in the proper administration and compliance with legal requirements. This article outlines the key differences, legal framework, and significance of AGMs and EGMs for CS professionals.

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What is an Annual General Meeting (AGM)?

An Annual General Meeting (AGM) is a mandatory meeting that must be held once every year for a company. According to Section 96 of the Companies Act, 2013, every company, except for a One Person Company (OPC), is required to conduct an AGM. The primary purpose of the AGM is to discuss the company’s performance over the past year, present audited financial statements, and elect directors or re-elect existing ones, among other essential decisions.

Key Features of an AGM:

Timing: An AGM must be held within six months from the end of the financial year, with a maximum gap of 15 months between two AGMs.

Agenda: The agenda typically includes the approval of financial statements, declaration of dividends, appointment or reappointment of directors, and the appointment of auditors.

Notice: A minimum of 21 clear days’ notice must be given to all members of the company.

Mandatoriness: It is a compulsory meeting under the Companies Act, 2013.

Shareholder Involvement: Shareholders are expected to participate, ask questions, and vote on resolutions.

Filing Requirements: CS professionals are responsible for filing the resolutions passed during the AGM with the Registrar of Companies (RoC).

Importance for CS Professionals:

• The CS ensures compliance with legal requirements.
• Prepares agendas, notices, and minutes for the AGM.
• Coordinates with the company’s auditors for the financial presentation.
• Ensures the proper conduct of elections and resolutions.

What is an Extraordinary General Meeting (EGM)?

An Extraordinary General Meeting (EGM) is a meeting that is called outside of the regular AGM cycle to address urgent matters that require immediate attention. These matters could include special resolutions like mergers, acquisitions, or changes in capital structure. An EGM can be convened at any time during the year.

Key Features of an EGM:

Timing: EGMs are called as needed, typically in urgent situations, and there is no fixed timeframe for such meetings.

Agenda: The agenda is focused on specific matters requiring shareholder approval, such as amendments to the company’s Memorandum and Articles of Association, or decisions related to raising funds, or changes in business direction.

Notice: A minimum of 21 clear days' notice is required, though an EGM can sometimes be called on shorter notice if all members agree.

Flexibility: Unlike the AGM, an EGM is not required by law to be held annually. It is convened whenever deemed necessary.

Shareholder Involvement: Shareholders have the opportunity to discuss and vote on the critical issues presented.

Filing Requirements: The resolutions passed in an EGM are also filed with the RoC, similar to the AGM.

Importance for CS Professionals:

• The CS ensures the legality of convening the EGM, especially if called at short notice.

• The CS coordinates the preparation of the agenda, notices, and minutes.

• They are also responsible for filing the resolutions passed with the RoC.

Key Differences Between AGM and EGM

 Below we've mentioned the key difference between Annual General Meeting vs Extraordinary General Meeting:

Legal Framework:

Both the AGM and EGM are governed by the Companies Act, 2013, which outlines the procedures for calling, conducting, and filing resolutions from these meetings. Specifically:

• Section 96 of the Companies Act, 2013 mandates the holding of the AGM.
• Section 100 of the Act provides provisions for the convening of an EGM, either by the board of directors or upon the request of shareholders holding a certain percentage of voting rights.

Role of the Company Secretary (CS)

For a Company Secretary (CS), understanding the procedures surrounding AGMs and EGMs is essential to ensure compliance with legal requirements and facilitate smooth operations. Some of the primary responsibilities include:

Drafting Notices and Agenda: Ensuring that notices for both AGMs and EGMs are prepared and dispatched on time.

Filing with RoC: After each meeting, the CS ensures that resolutions passed are filed with the Registrar of Companies, as required by law.

Maintaining Minutes: The CS must record the minutes of both AGMs and EGMs accurately, highlighting the discussions and resolutions passed.

Shareholder Communication: CS professionals serve as the point of contact for shareholders, providing information about the meetings and answering queries related to the matters being discussed.

Compliance Monitoring: Ensuring that all procedural requirements are met, including quorum requirements and the valid approval of resolutions.

Both Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) serve crucial purposes in corporate governance, providing platforms for shareholder decisions. While the AGM is a regular annual requirement to assess a company’s overall performance, the EGM is convened to handle urgent matters that arise unexpectedly. For Company Secretaries (CS), it is essential to have a clear understanding of both types of meetings to ensure legal compliance, efficient management, and accurate documentation. A well-conducted AGM or EGM can significantly impact a company's future, making the role of the CS in these processes invaluable.