Meetings are often called to order whenever a crucial decision must be made in the company. However, the Companies Act of 2013 does not define a meeting.
Two kinds of meetings are generally held in an organization: Annual General Meeting (AGM) and Extra-ordinary General Meeting (EGM). Though the end motive of both meetings is similar, the timing and the objectives are different.
In this article, we have covered the critical differences between AGM and EGM meetings in an organization. Please have a look at them below.
What is AGM?
AGM stands for Annual General Meeting. This kind of meeting is held once a year to showcase the business financial statements and get approvals from the members. Additionally, the members also have the right to ask about the company’s performance in that financial year.
If a single founder does not run the company, then it is essential to have annual meetings every year.
Purpose of calling an AGM
AGM is essential for the following reasons:
- Members need to approve the audited financial statements.
- Everyone has the right to discuss business activities.
- If any director is getting retired, the other panel members can vote for a new person.
- To declare the dividends of the members.
Who can call an AGM
Usually, the Board of Directors can call for the Annual General Meetings. The respective members can contact the relevant authorities to call for the annual meeting.
If anyone of the board members fails to hold the Annual General Meeting that year, any member can request the National Company Law Tribunal. The Tribunal will then review the request and send the directions to the respective members to hold the AGM call.
What is EGM?
EGM stands for Extra-Ordinary General Meeting. Any meeting apart from the Annual General Meeting can be considered the Extra-Ordinary General Meeting. Unlike EGM, the Annual General Meeting can be held multiple times yearly.
This meeting has a particular agenda and is usually held to discuss acquisitions, mergers, and also if there are any significant policy changes in the organization.
Purpose of calling an EGM
The purpose of calling an EGM is:
- To get urgent attention on essential matters related to the organization.
- Address the crucial queries and questions related to the members.
- To read out the resolutions.
Who can call an EGM
An EGM can be called by the board members or by the Chairman. Sometimes, it can also be done by the National Company Law Tribunal.
Whenever the company’s Chairman feels like holding an EGM, he can call out for the meeting. If not the Chairman, members who hold at least one-tenth of the company’s share capital can also request the EGM.
If any member holds one-tenth power of the company’s voting, they can also request an EGM.
If none of the above cases works, then National Company Law Tribunal also holds the power to hold the EGM meeting.
Difference between AGM and EGM
|AGM stands for Annual General Meeting. As per law, it needs to be held annually.||EGM stands for Extra-Ordinary General Meeting. It can be held whenever there are key issues to be addressed in the company.|
|This is applicable to every company apart from One person company||This is applicable to all companies|
|Board of Directors has the power to call for AGM. In case if they fail to host the AGM, the members can reach out to the respective authorities.||EGM can be called by either the Board of Directors or National Company Law Tribunal or by the Board on Requisition of members.|
|It is mandatory to have AGM once every year.||It is optional|
|This meeting is held to discuss the ongoing business activities and transactions. Any special business is also approved.||This business meeting is held to get immediate solutions for high-priority tasks or scenarios that require immediate attention.|
|The time limit to hold the AGM call is 9 months, close to the first financial year.||There is no time limit.|
|The subsequent meetings can be held within 6 months close to the relevant financial year.||The EGMs can be held anytime without the need for any specific time intervals.|
|AGM calls need to be held only during business hours and any day apart from National Holidays.||An EGM can be held even during National Holidays and anytime even after business hours. If it is done by requisitionists, it should be done only during business hours and anytime other than National holidays.|
|AGM must be held in the registered city of the company. In case the company is unregistered, the company needs to take consent of the members, either in writing or electronic mode, to hold meetings anywhere in India.||The EGM of the company needs to be held in India. If the company is incorporated outside India, then the meetings can be held outside of India.|
|If the company fails to hold an AGM meeting in that year, then the Board of Directors and the respective authorities are punishable up to Rs. 1 Lakh||There is no penalty if anyone fails to hold the EGM call.|
We hope this article has helped you understand the differences between the AGM and EGM meetings. Let us know if you have any more queries in the comment section below.