Section 100 Extraordinary General Meeting (EGM) under the Companies Act 2013

Imagine your company needs to make a critical decision – perhaps raising significant funds for a new project, changing its core business activities, or appointing a crucial new director mid-year. These decisions often can’t wait for the Annual General Meeting (AGM). This is where the extraordinary general meeting EGM comes into play. It’s a vital tool provided under Indian company law to address urgent matters that arise between AGMs. The legal framework for calling such meetings is primarily laid out in Section 100 EGM under Companies Act 2013. Understanding the EGM process is crucial for both company directors, who need to ensure compliance, and shareholders, who need to be aware of their rights and the decisions being made about their investment. Whether you’re a small business owner managing your company or a salaried individual holding shares, grasping the concept of an extraordinary general meeting EGM is essential for navigating the corporate landscape in India.

What is an Extraordinary General Meeting (EGM)?

An extraordinary general meeting EGM is formally defined as any general meeting of the shareholders (also called members) of a company other than its statutorily mandated Annual General Meeting (AGM). While the AGM handles routine annual business like approving financial statements, declaring dividends, and appointing auditors and directors retiring by rotation, the EGM is convened specifically to transact urgent or ‘special’ business that requires shareholder approval but cannot be postponed until the next scheduled AGM. Think of it as a special session called to address specific, significant issues that impact the company’s direction, structure, or finances. These meetings are a cornerstone of corporate governance in extraordinary general meeting EGM India, providing a platform for shareholders to deliberate and vote on critical proposals put forth by the management or, in some cases, by the shareholders themselves. They ensure that major decisions are not taken unilaterally by the Board of Directors but receive the necessary mandate from the company’s owners – the shareholders.

Understanding Section 100: Calling an Extraordinary General Meeting (EGM)

The power to call an extraordinary general meeting EGM doesn’t arise arbitrarily; it is explicitly granted and regulated by the Companies Act, 2013. The cornerstone provision governing this is Section 100 EGM under Companies Act 2013. This section meticulously outlines the procedures and identifies the authorities empowered to convene an EGM. It acts as the legal bedrock, ensuring that EGMs are called under defined circumstances and through proper channels. Section 100 essentially empowers three key parties to initiate an EGM: the Board of Directors itself, the shareholders (referred to as requisitionists under specific conditions), and, in exceptional circumstances, the National Company Law Tribunal (NCLT). By laying down these rules, Section 100 ensures a balance between the management’s need to act decisively on urgent matters and the shareholders’ right to be involved in major corporate decisions. These Companies Act 2013 EGM provisions are fundamental to maintaining transparency and accountability within a company’s operations.

Who Has the Authority to Call an EGM in India?

Section 100 of the Companies Act, 2013 clearly specifies who can convene an Extraordinary General Meeting. The authority is primarily vested in the Board of Directors, but shareholders also have significant rights in this regard.

By the Board of Directors

The Board of Directors holds the primary authority to call an EGM suo motu (on its own motion). Whenever the Board deems it necessary to obtain shareholder approval for any matter that qualifies as ‘special business’ and cannot wait for the next AGM, they can pass a resolution to convene an EGM. This power allows the company’s management to respond swiftly to emerging business needs or strategic opportunities that require shareholder consent, such as approving a major acquisition, altering the company’s objectives stated in the Memorandum of Association, or deciding on a significant restructuring plan. The Board decides the agenda, date, time, and place for the EGM and initiates the process of sending out the notice to all eligible members.

By Requisitionists (Members/Shareholders)

The Companies Act empowers shareholders to demand an EGM if they feel the Board is not acting on important matters or if they wish to propose specific resolutions. This is a crucial right ensuring shareholder democracy. According to Section 100(2), the Board must call an EGM if they receive a valid requisition (a formal request) from members who meet a specific threshold. This threshold is:

• In the case of a company having a share capital: Members holding at least one-tenth (1/10th) of the paid-up share capital of the company carrying voting rights as of the date the requisition is deposited.
• In the case of a company not having a share capital: Members holding at least one-tenth (1/10th) of the total voting power of all members as of the date the requisition is deposited.

For a requisition to be valid, it must:

• Clearly state the specific matters to be considered at the proposed EGM.
• Be signed by all the requisitioning members (or their duly authorized agents).
• Be deposited at the registered office of the company.

Board’s Obligation and Timeline: Once a valid requisition is received, the Board is legally obligated to act. They must, within 21 days from the date of receiving the valid requisition, proceed to call a meeting. This meeting must then be held within 45 days from the date the requisition was received.

Failure by the Board: What happens if the Board fails to call the meeting within the stipulated 21 days or hold it within 45 days? The requisitionists themselves gain the right to call and hold the EGM. They must convene the EGM within 3 months from the date the original requisition was deposited with the company. The EGM process in India includes a provision (Section 100(6)) stating that the company must reimburse the requisitionists for reasonable expenses incurred by them in calling this meeting. The company can then recover these costs from the fees or remuneration payable to the directors who were in default. These legal requirements for EGM India ensure that shareholder voices cannot be easily ignored.

By the Tribunal (NCLT)

While Section 100 primarily deals with EGMs called by the Board or requisitionists, the National Company Law Tribunal (NCLT) also has the power to order a general meeting (which could be an EGM) under specific circumstances, typically outlined in Sections 97 and 98 of the Companies Act, 2013. This usually occurs if, for any reason, it is impracticable to call or conduct a meeting in the manner prescribed by the Act or the company’s Articles of Association. For instance, disputes among directors or shareholders might create a deadlock preventing a meeting from being called. In such rare cases, the NCLT can intervene upon application by a director or member entitled to vote, and order a meeting to be held, even specifying how it should be conducted.

The Formal Process for Calling and Conducting an Extraordinary General Meeting (EGM)

Convening and holding an EGM involves a series of steps mandated by the Companies Act, 2013, to ensure fairness, transparency, and legal validity. Adhering to this EGM process in India is crucial for compliance.

Issuing the Notice of EGM

The first critical step is issuing a formal notice to all individuals entitled to receive it.

• Timeframe: Section 101 mandates that an EGM notice must be given at least 21 clear days before the meeting date. ‘Clear days’ means the day the notice is sent and the day of the meeting are excluded. However, an EGM can be called on shorter notice if consent is obtained in writing or via electronic mode from members holding not less than 95% of the paid-up share capital carrying voting rights (or 95% of total voting power for companies without share capital).
• Contents: The notice is a vital document and must specify:
  • The place, date, day, and the exact hour of the meeting.
  • A statement of the business to be transacted at the meeting. Since all business at an EGM is considered ‘Special Business’ (unlike an AGM which has ‘Ordinary Business’ too), this statement is crucial.
  • Crucially, attached to the notice must be an Explanatory Statement as required by Section 102. This statement must set out all material facts concerning each item of special business, including the nature of concern or interest (financial or otherwise) of every director, manager, key managerial personnel (KMP), and their relatives. This ensures shareholders have sufficient information to make an informed decision.
• Mode of Sending: Notice can be sent via post, registered post, speed post, courier, or through electronic means (like email) to the member’s registered address or email ID as per company records. Companies whose shares are listed may also need to publish the notice in newspapers.
• To Whom: The notice must be sent to:
  • Every member of the company.
  • The legal representative of any deceased member.
  • The assignee of an insolvent member.
  • The statutory auditor(s) of the company.
  • Every director of the company.
• External Reference: For the full text of the Companies Act, 2013, including sections related to meetings, you can refer to the official legislative portal or the Ministry of Corporate Affairs website: Ministry of Corporate Affairs (Link directs to the Act; navigate to relevant sections like 100, 101, 102). These legal requirements for EGM India are strict.

Quorum Requirements for an EGM

‘Quorum’ refers to the minimum number of members whose presence is necessary for the proceedings of a meeting to be valid. Without the requisite quorum, no business can be transacted. Section 103 specifies the quorum for general meetings:

• Public Company:
  • 5 members personally present if the total number of members as on the date of the meeting is not more than 1000.
  • 15 members personally present if the number of members is more than 1000 but not more than 5000.
  • 30 members personally present if the number of members exceeds 5000.
• Private Company: 2 members personally present shall be the quorum, irrespective of the total number of members.

Consequences of No Quorum: If the quorum is not present within half an hour from the time appointed for holding the meeting:

• If the meeting was called upon the requisition of members (under Section 100(2)), it shall stand cancelled.
• In any other case (e.g., called by the Board), the meeting shall stand adjourned to the same day in the next week, at the same time and place, or to such other date, time, and place as the Board may determine. If at the adjourned meeting also, quorum is not present within half an hour, the members present shall constitute the quorum. These legal requirements for EGM India ensure meetings are representative.

Conducting the Extraordinary General Meeting (EGM)

Once the notice period is complete and quorum is established, the meeting can proceed.

• Chairperson: The Chairman of the Board of Directors usually presides as Chairperson. If there is no Chairman, or if they are not present within 15 minutes after the scheduled time, or are unwilling to act, the directors present shall elect one of themselves to be Chairperson. If no director is present or willing, the members personally present shall choose one of themselves to be Chairperson by a show of hands (unless the Articles provide otherwise).
• Voting: Discussions take place on the items listed in the notice. Voting typically happens first by a ‘show of hands’. However, the Chairperson or members meeting certain criteria (holding specified share capital/voting power or number of members) can demand a ‘poll’. For certain companies, electronic voting (e-voting) facilities might also be mandatory or provided, allowing members to vote remotely before the meeting or during the meeting itself. Understanding the voting process is key for extraordinary general meeting EGM India.
• Resolutions: Decisions at EGMs are made by passing resolutions. Depending on the nature of the business, either an Ordinary Resolution or a Special Resolution is required:
  • Ordinary Resolution: Passed if the votes cast in favour (including the Chairman’s casting vote, if any) exceed the votes cast against. Required for matters like appointing directors in certain cases (though removal often needs special notice procedures).
  • Special Resolution: Requires the votes cast in favour to be at least three times the votes cast against. This higher threshold is mandated for significant decisions like altering the Memorandum or Articles of Association, changing the company name, shifting the registered office between states, reducing share capital, buy-back of shares, etc. Most EGM business requires Special Resolutions.

Minutes of the EGM

After the meeting concludes, detailed records must be kept. Section 118 of the Companies Act, 2013 mandates that every company must prepare, sign, and keep minutes of all proceedings of general meetings (including EGMs) and Board meetings.

• Contents: The minutes should contain a fair and correct summary of the proceedings, including appointments made, resolutions passed, and decisions taken. For resolutions passed by poll, the result of the poll should be recorded.
• Timeline & Signing: Minutes must be entered into the Minute Book within 30 days of the conclusion of the meeting. They must be signed and dated by the Chairperson of the meeting or the Chairperson of the next succeeding meeting.
• Legal Evidence: Properly recorded and signed minutes are considered legal evidence of the proceedings and the decisions taken therein. Accurate minute-keeping is a critical compliance requirement.

EGM vs. AGM: What Sets Them Apart?

While both are general meetings of shareholders, the Extraordinary General Meeting (EGM) and the Annual General Meeting (AGM) serve distinct purposes and have different characteristics under the Companies Act, 2013. Understanding these differences is important:

Feature	Annual General Meeting (AGM)	Extraordinary General Meeting (EGM)
Purpose	To transact regular ‘Ordinary Business’ (Accounts, Dividends, Director/Auditor appointments) and any ‘Special Business’.	To transact specific ‘Special Business’ that is urgent and arises between AGMs.
Frequency	Mandatory, must be held once every calendar year.	Held only when specific need arises for urgent decisions.
Mandate	Legally required every year (within specific time limits).	Not mandatory annually; required only situationally.
Business Type	Primarily Ordinary Business (defined in Sec 102); can also include Special Business.	Exclusively deals with Special Business (any business not defined as Ordinary Business).
Calling Authority	Primarily called by the Board of Directors.	Can be called by the Board, Requisitionists (Shareholders), or NCLT.
Timing Gap	Maximum gap between two AGMs cannot exceed 15 months.	No specific time gap mandated; called as needed.

This comparison highlights that AGMs are routine annual events focused on statutory compliances and regular shareholder updates, whereas EGMs are special, need-based meetings for significant corporate actions requiring immediate shareholder approval.

Why Would a Company Need an Extraordinary General Meeting (EGM)? Common Scenarios

Companies convene an extraordinary general meeting EGM for various reasons, typically involving significant changes or decisions that fall outside the scope of routine annual business. These situations often require shareholder approval via a Special Resolution (or sometimes an Ordinary Resolution, depending on the specific provision). Here are some common scenarios triggering the need for an EGM, particularly relevant for businesses in India:

• Alteration of Memorandum of Association (MOA):
  • Changing the Company Name: Requires a Special Resolution (Sec 13).
  • Shifting the Registered Office from One State to Another: Requires a Special Resolution and NCLT approval (Sec 13).
  • Altering the Objects Clause: If the company wants to change its main business activities, it requires a Special Resolution (Sec 13).
• Alteration of Articles of Association (AOA): Any changes to the internal rules and regulations of the company require a Special Resolution (Sec 14).
• Appointment or Removal of Directors: While routine appointment/re-appointment happens at AGMs, the removal of a director before their term expires (Sec 169) or the appointment of a director under certain specific circumstances might necessitate an EGM (often requiring an Ordinary Resolution but special notice procedures apply for removal).
• Issue of Further Shares:
  • Rights Issue: While often approved by the Board, certain aspects or deviations might need shareholder nod.
  • Private Placement (Preferential Allotment): Issuing shares or securities to a select group of persons requires a Special Resolution (Sec 62(1)(c) read with Sec 42).
• Buy-Back of Shares: If a company intends to buy back its own shares, it requires a Special Resolution passed at a general meeting (Sec 68).
• Significant Borrowing Decisions: If the Board proposes to borrow money (together with existing borrowings, excluding temporary loans) exceeding the aggregate of the company’s paid-up share capital, free reserves, and securities premium, it requires shareholder approval via a Special Resolution at a general meeting (Sec 180(1)(c)). For more details, you can review the restrictions on the powers of the board.
• Major Asset Sales or Disposals: Selling, leasing, or otherwise disposing of the whole or substantially the whole of the undertaking of the company requires a Special Resolution (Sec 180(1)(a)).
• Scheme of Arrangement or Merger: Proposals involving compromises, arrangements, or mergers often require approval at shareholder meetings convened as per NCLT directions, which function similarly to EGMs in terms of shareholder voting (Sections 230-232).

These examples illustrate that an extraordinary general meeting EGM is essential whenever a company plans strategic moves that fundamentally affect its structure, finances, or operations, ensuring shareholders have the final say.

Conclusion

The extraordinary general meeting EGM serves as a critical mechanism within the framework of the Companies Act, 2013, allowing companies to address urgent and significant matters that cannot wait for the routine Annual General Meeting. Governed primarily by Section 100 EGM under Companies Act 2013, the EGM provides a platform for shareholders to deliberate and vote on crucial decisions, ensuring corporate democracy and accountability. Understanding the EGM process in India, from who can call the meeting (Board, Requisitionists, NCLT) to the procedural requirements like notice periods, quorum, conduct, and minute-keeping, is vital.

For company management, strict adherence to the legal requirements for EGM India is non-negotiable for ensuring the validity of decisions and avoiding legal challenges. For shareholders, EGMs represent an important opportunity to exercise their rights and influence the company’s direction. Whether it’s altering the company’s core documents, approving major financial transactions, or making changes to the Board, the EGM ensures these actions receive the necessary shareholder mandate. Navigating the intricacies of Companies Act 2013 EGM provisions and ensuring full compliance can sometimes be challenging. If your business needs assistance with conducting EGMs, ensuring compliance with company law, or if you as a shareholder need clarity on your rights, expert guidance is invaluable.

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Frequently Asked Questions about EGMs in India

Q1: What is the minimum notice period required for calling an extraordinary general meeting EGM?

A: Generally, a clear notice of at least 21 days is required before the date of the extraordinary general meeting EGM, as per Section 101 of the Companies Act, 2013. ‘Clear days’ exclude the day the notice is sent and the day of the meeting. However, an EGM can be called at shorter notice if consent is given in writing or electronically by members holding at least 95% of the paid-up share capital carrying voting rights (or 95% of total voting power for companies without share capital).

Q2: Can an EGM be held online or electronically in India?

A: Yes, the Companies Act, 2013, along with rules and circulars issued by the Ministry of Corporate Affairs (MCA), permits companies to hold EGMs through video conferencing (VC) or other audio-visual means (OAVM), subject to compliance with specific procedural requirements. These provisions became particularly prominent following the COVID-19 pandemic. Companies must ensure facilities for e-voting, recording of proceedings, and proper identification of participating members as per MCA guidelines.

Q3: What happens if the quorum is not present at an EGM called by requisitionists?

A: As per Section 103(2)(a), if the quorum (minimum required members present) is not present within half an hour of the scheduled time for an EGM called by requisitionists (under Section 100(2)), the meeting stands cancelled. This differs from an EGM called by the Board, which typically gets adjourned to a future date if quorum is lacking initially.

Q4: What is ‘special business’ transacted at an extraordinary general meeting EGM?

A: Under the Companies Act, 2013 (Section 102), all business transacted at an extraordinary general meeting EGM is considered ‘Special Business’. Additionally, any business transacted at an AGM is also considered ‘Special Business’, except for the four items classified as ‘Ordinary Business’ (consideration of financial statements/reports, declaration of dividend, appointment of directors retiring by rotation, appointment/fixing remuneration of auditors). An Explanatory Statement detailing material facts must accompany the notice for all Special Business items.

Q5: Do legal requirements for EGM India differ significantly between private and public companies?

A: The core principles under Section 100 (calling of EGM), Section 101 (Notice), Section 102 (Explanatory Statement), and Section 118 (Minutes) generally apply to both private and public companies. However, some legal requirements for EGM India differ:

• Quorum (Section 103): A private company requires only 2 members personally present to form a quorum, regardless of size. Public companies have tiered quorum requirements (5, 15, or 30 members) based on the total number of members.
• Exemptions/Privileges: Private companies might enjoy certain exemptions or less stringent compliance requirements under the Act or via specific notifications, although core meeting procedures are largely similar for EGMs dealing with significant matters requiring shareholder approval.