Guide to Extraordinary General Meeting of Indian Company

Section 100 of the Companies Act 2013. Calling of Extraordinary General Meeting (EGM).

There are so many matters relating to the business of a company, which require approval or consent of members in general meeting. It is not always possible for consideration of such matters to wait until the next annual general meeting. The articles of association of the company make provisions for convening general meeting other than the annual general meeting. All general meetings other than annual general meeting are called extra-ordinary general meetings (EGM). According to SS-2, all items of business other than ordinary business, may be considered at an EGM or by means of a postal ballot, if thought fit by the Board. This means that all the transactions dealt upon in an EGM shall be special business.

(1) By the Board Suo motu

The Board may, whenever it deems fit, call an EGM of the company. An extraordinary general meeting
of the company shall be held at any place in India. An extraordinary general meeting of a company
which is wholly owned subsidiary of a company incorporate outside India, may be held outside India.

(2) By the Board on requisition of members

(a) in the case of a company having a share capital: members who hold, on the date of the receipt
of the requisition, not less than one-tenth(10%) 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: members who have, on the date of receipt
of the requisition, not less than one-tenth (10%) of the total voting power of all the members having on the said date a right to vote.

Matters set out for consideration in requisition: The requisition made as above, 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.

Time period for calling the meeting: The Board is required to proceed to call a meeting within 21 days
from the date of receipt of a valid requisition, to convene a meeting which should be held within 45 days of such deposit of the requisition with the company.

If company failed to hold meeting within specified time(i.e 45 day’s) the meeting may be called and held by the requisitonists themselves within a period of three months from the date of the requisition.

the requisitionists shall be called and held in the same manner in which the meeting is called and held by the Board.

Reimbursement of expenses in calling a meeting: Reasonable expenses incurred by the
requisitionists in calling such a meeting shall be reimbursed by the company to the requisitionists.
The company in turn recovers such expenses from any fee or other remuneration under section
197 payable to such of the directors who were in default in calling the meeting.

Exceptions:-

in case of a Specified IFSC private company, the Board may subject to the consent of all the shareholders, convene its extraordinary general meeting at any place within or outside India.

case laws:-

1. Vijay M. Porwal v. Pentokey Organy (India) Ltd. (1995)

Facts:
In this case, shareholders sought to convene an Extraordinary General Meeting (EGM) to remove certain directors. The company contested the requisition, arguing that shareholders were required to disclose reasons for the proposed resolutions.

Judgment:
The Supreme Court of India held that shareholders have the statutory right to requisition an EGM without disclosing reasons for the resolutions they propose. The Court emphasized that shareholders cannot be restrained from exercising this right, and their reasons are not subject to judicial review.

Key Takeaway:
This case established that shareholders’ right to call for an EGM is fundamental and cannot be curtailed by requiring the disclosure of reasons.

2. Zee Entertainment Enterprises Ltd. v. Invesco Developing Markets Fund (2021)

Facts:
Invesco Developing Markets Fund, holding 17.88% of the equity shares in Zee Entertainment, requisitioned an EGM to remove certain directors, including the Managing Director, and to appoint new independent directors. Zee Entertainment’s Board refused to convene the meeting, arguing that the requisition was invalid and violated regulatory provisions. Invesco moved the National Company Law Tribunal (NCLT) to enforce its right to convene the EGM.

Judgment (NCLAT):

• The Tribunal ruled that Invesco’s requisition was valid under Section 100 of the Companies Act, 2013.
• It emphasized that the Board of Zee Entertainment had a mandatory duty to call the EGM within 21 days of receiving a valid requisition.
• The Court rejected the Board’s argument that it could refuse the requisition based on alleged non-compliance with regulations. The validity of the resolutions could only be determined after the EGM and not preemptively by the Board.

Key Takeaway:
The case reaffirmed shareholders’ rights to call for an EGM as part of shareholder democracy and emphasized the mandatory nature of the Board’s duty to convene such a meeting when requisitioned.

Disclaimer: This content is written by Chiman Soni, a CS Executive student and founder of Corporate Laws Hub. The information provided herein is for educational and informational purposes only and should not be construed as legal advice or financial advice. While every effort has been made to ensure the accuracy and reliability of the information, readers are advised to consult a qualified legal professional, financial advisor, or refer to authoritative sources for specific legal or financial queries or concerns.