In today’s competitive environment, many individuals are forming companies to reap the benefits of equity investments and the advantage of economies of scale.
The formation and running of any company are fraught with multiple complexities and compliance formalities. One of the significant and mandatory compliance is the holding of necessary meetings at specified frequencies.
Company meetings can be of different types and depend on the structure of the specific company. For example, a private company may have other arrangements to be held compared to a public company.
Also, the meetings are held at all levels of the organization. The two common types of discussions at the top leadership levels are Board Meeting and the Extraordinary General Meeting.
- A board meeting is a formal gathering of a company’s board of directors to discuss and decide company matters. In contrast, an extraordinary general meeting (EGM) is a special shareholders’ meeting called for a specific purpose or to address urgent matters that must be completed on the next annual general meeting (AGM).
- Board meetings are held regularly and attended by the company’s board of directors, while EGMs are convened on an ad-hoc basis and are open to all company shareholders.
- Both board meetings and EGMs are important for corporate governance and decision-making. Still, board meetings focus on the ongoing management and oversight of the company, while EGMs address specific, urgent issues requiring shareholder input.
Board Meeting vs Extraordinary General Meeting
A board meeting is a formal meeting of the board of directors of a company or organization. An extraordinary general meeting (EGM) is a special meeting of a company’s shareholders called for a specific purpose that cannot be addressed in the company’s regular annual general meeting.
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However, the above is not the only difference. A comparison between both the terms on specific parameters can shed light on subtle aspects:
|Parameter of Comparison||Board Meeting||Extraordinary General Meeting|
|Meaning||Board Meeting is a meeting conducted to discuss general business performance and plans.||An extraordinary General Meeting is a meeting to discuss a specific subject or an area of immediate concern.|
|Purpose||Discuss general operations and results of business, including financial results, and also discuss plans and vision of the company.||Discuss any specific areas of concern, pass any particular resolution, or discuss any immediate or urgent burning issues.|
|When conducted||For public companies- The first meeting has to be conducted within 30 days of incorporation, and at least four meetinfours should be held annually.||Anytime depending on the gravity of the situation/purpose to be discussed|
|When the first meeting held||Within 30 days of incorporation of the company||Can be conducted at any time, depending on the need|
|Pre-scheduled||Yes||No, but it depends, as certain notifications may need to be sent|
|Participation of top leadership||No||Yes, because the issues being discussed are critical and requires brainstorming and solution from the top minds of leadership|
|Called by||Board of directors||Called by the Board of directors or at the request of certain specific shareholders|
|The relevant section in Indian Companies Act 2013||Section 173- Meetings of Board||Section 100-Calling of Extraordinary General Meeting|
What is Board Meeting?
Board Meeting, as the name indicates, is a meeting of the Board, i.e., the company’s Board of Directors.
The Board of Directors is responsible for envisioning the objectives and mission of the company and putting the said objectives into implementation.
The Board Meeting discusses how far the company has reached in achieving its goals and what its plans are for the future.
Board Meeting is a meeting that is requested by the directors, i.e., the Board. All members (i.e., the shareholders) should attend this meeting to understand how the company is putting into practice the money invested by the shareholders.
Board Meeting is a mandatory meeting. Board Meeting has to be compulsorily held within 30 days of incorporation of a company. Further, there is a requirement for at least 4 Board Meetings in a year.
Additional compliance requires that there should not be a gap of more than 120 days between two Board Meetings.
The Government prescribes Board Meeting requirements from time to time.
For example, a Person Company, a small company, or a dormant company shall have at least one Board Meeting being conducted half-yearly. The gap between the two Board Meetings should not exceed ninety days.
The participation of the Board of directors in the Board Meeting can be done preferably in person. The other alternative is to engage in a video conferencing mode or even through any other audiovisual method.
The recording of the meeting proceedings has to be stored.
Board Meeting has to be conducted after giving prior notice specifying the time and place of the meeting.
It is required to provide at least 7 days’ notice for the Board Meeting. In some instances, Board Meeting may be called at shorter notice to discuss any urgent matters, but in this case, at least one independent director, if any, shall be present at the meeting.
What is Extraordinary General Meeting?
As the name implies, an extraordinary General Meeting is a meeting the Board calls to discuss outstanding issues.
The Board of Directors calls an Extraordinary General Meeting as they deem fit, having due regard to the issue to be discussed and the interests of the shareholders.
An extraordinary General Meeting is held to deliberate on some urgent and burning topics or issues a company faces.
An extraordinary General Meeting requires the participation of all top-level executives as the subject being discussed in this meeting is severe and of immediate concern to the company.
An extraordinary General Meeting can be called on the requisition being made by a specific category of majority shareholders.
This can mean, in the case of a company with a share capital, shareholders who hold not less than 1/10th of such paid-up share capital carry voting rights.
In the case of a company that does not have a share capital, shareholders hold not less than 1/10th of the total voting power on the date of request of holding the meeting.
The shareholders making the request must set out the matters for discussion in the requisition.
The Board of Directors will have to hold the Extraordinary General Meeting within 21 days of the date of a request being made by certain shareholders.
The concerned shareholders also have the right to hold the Extraordinary General Meeting in case the Board of Directors fails to adhere to their request.
Main Differences Between Board Meetings and Extraordinary General Meetings
- A Board Meeting is held to discuss ongoing operations, company performance, results, and plans. An extraordinary General Meeting is held to discuss any urgent or problematic issue facing the company which is of immediate concern to the company.
- Board Meetings shall be held within 30 days of incorporation. Extraordinary General Meeting does not have any such requirements.
- Board Meeting for a public company has to be held 4 times a year. Extraordinary General Meeting does not have such requirements.
- The Board of Directors calls upon Board Meeting. An extraordinary General Meeting is called by the Board of Directors or the Board of Directors at the request of shareholders with a particular stake in the company.
- Board Meetings may not require the participation of all top-level leadership people. Extraordinary General Meeting requires the involvement of all top-level executive leadership.
- Board Meeting is detailed under Section 173 of the Indian Companies Act 2013. Extraordinary General Meeting is handled under Section 100 of the Indian Companies Act 2013.
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.