Difference between Annual General Meeting (AGM) and Extraordinary General Meeting (EGM)

Meetings are one such arrangement where both shareholders and office bearers of the company come together to discuss business and non-business agendas. This makes sure that neither shareholders nor the office bearers make any decisions about the company by themselves, which could jeopardize the operations of the company. The Companies Act has provided regulations regarding management and arrangements in cases of Annual General Meetings (AGM), which are held at least once a year to discuss ordinary business agendas, and Extraordinary General Meetings (EGM), which are held on the requisition of members to discuss urgent matters.

What is an Annual General Meeting?

An Annual General Meeting (AGM) is an annual gathering of the company’s shareholders and board of directors. The company’s directors provide an annual report to shareholders at an AGM that details the company’s performance and strategy. AGMs are mandatory under the Companies Act, 2013 to be held to discuss annual results, the appointment of auditors, and other matters. To organize the AGM, a company must adhere to the regulations outlined in the Companies Act, 2013. Section 96 states that every company other than a one-person company shall hold a general meeting in each year in addition to any other meetings. The full form of the AGM is the Annual General Meeting. It is essential that the interval between two Annual General Meetings (AGMs) not exceed 15 months. However, it is worth noting that the initial Annual General Meeting (AGM) of a business has the flexibility to be scheduled on any day within 18 months after the firm’s incorporation. Annual General Meetings provide members with valuable insights into the company’s plan for improvement under the current rate of growth.

The Annual General Meeting (AGM) provides valuable insights into the strategic decisions and actions that have contributed to the company’s success, as well as those that have resulted in financial losses. This helps both the members and the board in determining the subsequent steps to be taken. It is important that an Annual General Meeting (AGM) be conducted exclusively on a business day. In the event that the government officially designates a public holiday on the scheduled day of the meeting, the participating members will regard it as a regular working day. However, AGM cannot be held on a national holiday. The venue for the annual general meeting may be designated as the registered office of the firm.

What is an Extraordinary General Meeting?

An Extraordinary General Meeting (EGM) is not an Annual General Meeting (AGM). EGM is held when some urgent issues arise in the company, and it requires the input of all the senior executives and the board. In the complex realm of corporate governance within India, the Companies Act, 2013, stands tall as the bedrock, delineating the legal architecture that governs the operations of companies. This comprehensive legislation lays out the principles and regulations that companies must adhere to, shaping the contours of their functioning. Central to this framework is the provision for meetings, a key arena of corporate discourse. Within this landscape, extraordinary general meetings (EGMs) emerge as a focal point, offering a specialized platform for companies to address urgent and critical matters that demand immediate attention. An Extraordinary General Meeting (EGM) is an exceptional assembly convened by a company to deliberate and decide on matters of urgency that cannot await the routine schedule of an Annual General Meeting (AGM). AGMs, which follow regular intervals, serve as forums for routine corporate activities. In contrast, EGMs are summoned on an ad hoc basis, responding to exigent circumstances that necessitate immediate attention. Unlike the more predictable and routine nature of AGMs, EGMs provide a dynamic platform for active shareholder participation in decision-making processes.

Difference between Annual General Meeting (AGM) and Extraordinary General Meeting (EGM)

Basis of Difference	Annual General Meeting (AGM)	Extraordinary General Meeting (EGM)
Frequency	AGMs are held once every year. The Companies Act has established the specified time within which AGMs are to be held. Generally, the AGM is held 15 months after the financial year-end.	EGM is conducted as and when necessary to address urgent matters that cannot wait until the next AGM.
Purpose	The purpose of an AGM is to present the financial statements of the company and discuss matters of the company. An AGM is an interaction between management and shareholders.	The purpose of the EGM is to address those specific extraordinary matters that require the approval of shareholders outside the regular AGM schedule.
Agenda	AGM agenda Includes all standard items such as financial statement approval, appointment of directors and auditors, declaration of dividends, and other regular business.	The EGM includes particular agendas for which it is convened. The agenda of the AGM is specific to the extraordinary matter at hand.
Notice Period	The requirement for a notice period for an AGM is prescribed by the Companies Act and the company’s Articles of Association to allow shareholders enough time for preparation and attendance.	The notice period for an EGM is typically shorter, as EGMs are convened to address urgent matters. The EGM notice must comply with the statutory requirements for calling a meeting
Quorum Requirements	The Companies Act has prescribed the minimum quorum required for an AGM. The Companies Act has defined quorum requirements in cases of both private and public companies	The quorum requirement for an EGM may depend on the company’s Articles of Association, but generally, the EGM quorum is lower than that of an AGM, as urgent matters are required to be discussed at the EGM.
Who Convenes Meeting	An AGM is conveyed by the board of directors. The central government can also call the meeting on the application of members of the company.	An EGM can be convened by the BOD on the requisition of members of the company, the requisitionists themselves, or NCLT.
Penal Provision	In case a company fails to hold the AGM, every officer concerned in this matter shall be fined up to ₹ 1,00,000.	If the director fails to hold this meeting on requisition, the act allows the requisitionists to hold the meeting and recover the expenses incurred in holding such a meeting.
Provision applicable	Provisions of Section 96 of the Companies Act, 2013 are applicable.	Provisions of Section 100 of the Companies Act, 2013 are applicable.

Conclusion

Interaction between management and shareholders is very important for conducting the business affairs of the company. The Companies Act, 2013 has considered the same and provided under Sections 96 and 100 about the provisions of AGM and EGM. An Annual General Meeting (AGM) is an annual gathering of the company’s shareholders and board of directors. The company’s directors provide an annual report to shareholders at an AGM that details the company’s performance and strategy. AGMs are mandatory under the Companies Act, 2013 to be held to discuss annual results, the appointment of auditors, and other matters. EGM is held when some urgent issues arise in the company, and it requires the input of all the senior executives and the board. In the complex realm of corporate governance within India, the Companies Act, 2013, stands tall as the bedrock, delineating the legal architecture that governs the operations of companies. An AGM is conveyed by the board of directors. The central government can also call the meeting on the application of members of the company. An EGM can be convened by the Board of Directors, the Board of Directors on the requisition of members of the company, the requisitionists themselves, and the NCLT.

Frequently Asked Questions (FAQs)

1. What is an Annual General Meeting (AGM)?

Answer:

An Annual General Meeting (AGM) is an annual gathering of the company’s shareholders and board of directors. The company’s directors provide an annual report to shareholders at an AGM that details the company’s performance and strategy. AGMs are mandatory under the Companies Act, 2013 to be held in order to discuss annual results, the appointment of auditors, and other matters.

2. What is an Extraordinary General Meeting (EGM)?

Answer:

An Extraordinary General Meeting (EGM) is the one that is not an Annual General Meeting (AGM). EGM is held when some urgent issues arise in the company and it requires the input of all the senior executives and the Board.

3. Who can call an Extraordinary General Meeting (EGM)?

Answer:

An EGM can be convened by Board of Directors, Board of Directors on requisition of members of the company, the requisitionists themselves, and by the NCLT.

4. What is the quorum for holding an AGM?

Answer:

For a Public Company:

• If the total number of members is below 1000, there are 5 members required to be personally present to form a Quorum.
• If the total number of members is above 1000 but below 5000, there are 15 members required to be personally present to form a Quorum.
• If the total number of members is above 5000, there are 30 members required to be personally present to form a Quorum.

2. For a Private Company:

• The number of members is not significant; however, at least two members must be present within half an hour of the commencement of the meeting.

5. What is the purpose of the Extraordinary General Meeting (EGM)?

Answer

The purpose of AGM is to address those specific extraordinary matters that require approval of shareholder outside the regular AGM schedule.