Annual General Meeting (AGM) vs Extraordinary General Meeting (EGM)
The key difference between AGM and EGM lies in the fact that the Annual General Meeting is conducted annually by the company to do business discussions while Extraordinary General Meeting is conducted for other purposes of the business other than AGM.
The first meeting of AGM should be conducted before the financial year within 9 months while EGM has no stipulated time, it can be conducted on any day or time.
‘Meeting’, one of the most commonly heard words in the corporate and business world. Meetings are of many types and can be classified on several bases like time, level of management, agenda, need, etc.
The most important meetings are those, which are held on the top level of the organization (generally board of directors and shareholders).
The two most important meetings held on the top level are the Annual General Meeting (also known as AGM) and the Extraordinary General Meeting (also known as EGM).
The Annual General Meeting is a mandatory meeting of shareholders (members) held yearly. In which, directors and shareholders discuss the operations and results of the company.
Directors present financial statements, various reports and analyses to the shareholders and shareholders express their views and ideas.
If we talk about an Extraordinary General Meeting, it is a special meeting that is neither pre-scheduled nor mandatory to conduct.
It can be called any time by the board of directors to discuss urgent matters.
In simpler terms, Extraordinary General Meeting is any meeting of members of the company, other than the Annual General Meeting.
Comparison Table Between Annual General Meeting (AGM) and Extraordinary General Meeting (EGM) (in Tabular Form)
|Parameter of Comparison||Annual General Meeting||Extraordinary General Meeting|
|Meaning||Annually conducted meeting of members of the company.||Specially conducted meeting of members of the company.|
|Necessary||The Annual General Meeting is mandatory for a company and should be conducted yearly.||The Extraordinary General Meeting is not mandatory.|
|Time||The Annual General Meeting is conducted in business hours only. It cannot be conducted on national holidays.||The Extraordinary General Meeting can be conducted on national holidays.|
|Called by||Board of directors can only call the Annual General Meeting.||Extraordinary General Meeting can be called by the board on request of shareholder or NCLT (national company law tribunal).|
|Purpose||Annual General Meeting is called to discuss the past, present and future of the company.||Extraordinary General Meeting is conducted to discuss any urgent matter or to pass special resolution urgently.|
What is the Annual General Meeting (AGM)?
The Annual General Meeting or AGM is a meeting of members of the company mandatory by law to be conducted annually.
As per law, every company other than One Person Company (OPC) must conduct AGM (as there is only one member in OPC).
Prior notice is given for conducting an AGM specifying the time and place of the meeting. Companies hold their Annual General Meeting within six months of the closing of the financial year.
But a company may conduct it’s first-ever AGM within 9 months of the closing of its first financial year.
AGM can only be conducted in business hours (9 a.m.- 6 p.m.) and on working days i.e. it cannot be conducted on holidays.
AGM is an opportunity for both, shareholders and directors to express their ideas and vision for the company.
Let’s take a look at the main considerations of an AGM-:
- Presentation of financial statements to shareholders for approval.
- Various other reports like directors’ and auditors’ reports are also presented to the shareholders.
- Appointment of Auditors.
- Shareholders also elect/appoint new Directors.
- Declaration of Dividend.
And AGM is necessary if,
- The government takes the company’s business.
- Accounts of the company are not ready.
What is Extraordinary General Meeting (EGM)?
Extraordinary General Meeting is an emergency meeting or any meeting of shareholders than the annual general meeting.
It is not pre-scheduled. It can be called by the Board of Directors on the request of shareholders or tribunal. It can be held on any day including national holidays.
It is not a mandatory meeting by law and held to discuss sudden situations or urgent matters in which the board requires the consent of members.
Extraordinary General Meeting is also known as a special meeting or emergency meeting.
The main concern for conducting an Extraordinary General Meeting can be-:
- Removal of an Executive.
- Legal matters.
- When the board needs Shareholders’ suggestions.
- When tribunal calls the meeting on the request of any member.
- And any other reason for which company cannot wait for the next AGM.
Main Differences Between Annual General Meeting (AGM) and Extraordinary General Meeting (EGM)
- Annual General Meeting is mandatory by law and is to be held annually. Whereas, there is no such obligation by law to conduct an Extraordinary General Meeting.
- Only the Board of Directors can call the Annual General Meeting. While Extraordinary General Meeting can be called by the Board on request of members or Tribunal.
- The Annual General Meeting is pre-planned i.e. its date, time and place are already determined. In the case of Extraordinary General Meeting, the meeting is held on short notice and therefore not pre-planned.
- The main concerns of an Annual General Meeting are the presentation of financial statements and various reports to the shareholders, declaration of dividends, etc. While in Extraordinary General Meeting the main concerns are any emergency like removal of the executive or legal matters.
- Annual General Meeting is held only once in a financial year. There is no such condition on Extraordinary General Meeting, it can be held more than once.
- Any other meeting of shareholders than the Annual General Meeting is known as Extraordinary General Meeting.
Frequently Asked Questions (FAQ) About the Annual General Meeting (AGM) and Extraordinary General Meeting (EGM)
- Who can call an Extraordinary General Meeting?
An EGM (extraordinary general meeting) is a meeting of stakeholders that is different from an AGM.
It is held when urgent issues arise about a company or any crises that need the input of senior executives.
A committee member can call for an extraordinary general meeting.
However, the member must be approved by a high number of voting committee members.
The Board or requisitionists can also call the meeting.
- How many days’ notice is required for an EGM?
A 21 days’ notice period must be offered to members. Nevertheless, there's an exception to this requirement.
In case 95% of shareholders with voting rights consent, the meeting will be held at short notice.
- What is the quorum for an AGM?
The least number of members who are required to participate in the annual general meeting for it to be recognized as a valid meeting is known as a quorum.
The law states that the quorum for a pubic form is 3 members, and that of a private firm is 2 members.
- Are all companies required to hold an Annual General Meeting (AGM)?
If you run a public company, the law requires you to hold annual general meetings.
This means that you are supposed to hold an AGM within the first 18 months after you register the company.
After that, you will hold at least one AGM every year.
Also, you are required to hold this meeting within 5 months of the business’ financial year-end.
- Can a proxy speak at an AGM?
A proxy is a substitute. A proxy refers to a person sent by a member to attend the AGM on his/her behalf.
Any member with the right to participate in an annual general meeting and vote can send a proxy to participate in the meeting on his behalf and even vote.
However, he or she can’t speak at the meeting. The proxy sent can be an outsider.
In nutshell, both the meetings are the gathering of shareholders to discuss the matters of the company.
The simple difference between both is that the Annual General Meeting is necessary to conduct by the law and Extraordinary General Meeting is conducted as per the will of Board, members or tribunal i.e. it is not necessary to conduct an Extraordinary General Meeting.
An Extraordinary General Meeting is conducted on short notice, while the Annual General Meeting is pre-scheduled.
Generally, the normal business is the main focus in an Annual General Meeting like the declaration of dividends, approval of financial statements by the shareholders, appointment of new directors or auditors.
In an Extraordinary General Meeting, the special business is the main focus like the removal of an executive, urgent matters, legal matters, etc.
Word Cloud for Difference Between Annual General Meeting (AGM) and Extraordinary General Meeting (EGM)
The following is a collection of the most used terms in this article on the Annual General Meeting (AGM) and Extraordinary General Meeting (EGM). This should help in recalling related terms as used in this article at a later stage for you.