The terms “Statutory meeting” and “Extraordinary General Meeting” are both related to meetings held by company shareholders.
Key Takeaways
- A statutory meeting is a mandatory meeting held by a public company within a specified period after its incorporation. In contrast, an extraordinary general meeting (EGM) is a shareholder meeting held outside of the regular annual general meeting.
- The purpose of a statutory meeting is to provide company updates and financial statements to shareholders, while EGMs address urgent or special matters that require shareholder input.
- Statutory meetings occur only once in a company’s lifetime, while EGMs can be called multiple times as needed.
Statutory Meeting vs Extraordinary General Meeting
The difference between a statutory meeting and an extraordinary general meeting is when the meeting is held. The statutory meeting is held right at the beginning of the first fiscal year, while the special public meeting is held at any time other than the annual shareholder meeting.
The statutory meeting is the first held by the shareholders right before the company is ready to do business in the market. Here, introductions are done, final revisions to the business plan are made and so forth.
The extraordinary general meeting is separate from the annual shareholder meeting (fixed at a specific date and time). It is conducted in a state of emergency or if any urgent decisions should be made.
Comparison Table
| Parameters of Comparison | Statutory meeting | Extraordinary General Meeting |
|---|---|---|
| Definition | It is held before the company begins to conduct any form of business. | It is held at any time other than the annual shareholder meeting that is scheduled every year. |
| Number of times held | A statutory meeting is only conducted once in the company’s lifetime, one or six months before the business begins. | Depending on the issue, an extraordinary general meeting can be held several times. |
| Reason to call | It is the initial meet of the company’s shareholders or a regular meeting. | Called in the state of emergency or if any urgent matter needs to be discussed by the shareholders. |
| Matters discussed | Subject matters regarding the formation of the company are discussed, and final decisions are passed (a statutory report is made) | Topics discussed – legal issues, removal of directors or executives, urgent matters. |
| Types of company | Only public companies are obligated to hold a statutory meeting. | Here, government, private, and public companies can hold the meeting; if forced, they are mandated to keep it. |
What is Statutory Meeting?
A statutory meeting is held from 6 months up to one before any business is conducted by the company, which would be before the beginning of the company’s first fiscal year.
This meeting is the first shareholder meeting held by the company and only takes place once in the company’s lifetime. This meeting is necessary because it would be the first initial meeting between the shareholders.
Now all companies, such as the private and government sectors, don’t need to conduct this meeting. Only public sector companies must attend a statutory meeting and create a report.
A statutory report is to be submitted by the board of directors to each member of the company 21 days before the meeting, containing various details regarding the company, such as –
- Information on all the members of the board of directors, the shareholders and any other key company members.
- Cash received concerning the shares of the company.
- The total number of shares allotted to each company member, including the shareholders and directors.
- Receipts and payments to vendors or for any purchases made by the company to commence business.
The meeting is primarily based on the contents of the statutory report. Members can ask doubts or raise any questions regarding the information. The company board unanimously agrees if any changes are needed, and only then can it be passed.
What is Extraordinary General Meeting?
An extraordinary general meeting is a gathering of the company’s shareholders held at an uncertain time.
The session can be called for if all the shareholder agrees to it and takes place separately from the annual meeting, which is set to happen every year at a particular time and date. This meeting can occur several times, depending on the matter.
Companies belonging to all sectors, such as private, public and government, can hold an extraordinary general meeting. Now it is not a mandatory meeting, but if all the directors and shareholders agree, everyone has to attend it.
This meeting is held in case any emergency or any urgent matter must be discussed, such as –
- Issues regarding the current functioning of the company.
- Any legal issues that the company or any member might be facing
- The removal of a director, a shareholder, or any executive through a unanimous vote.
An extraordinary general meeting is called during a state of emergency, and it can be held at any date or time, even on holidays or off days.
Main Differences Between Statutory Meetings and Extraordinary General Meetings
- A statutory meeting is held before the first fiscal year begins. An Extraordinary general meeting is held at an uncertain time of the year and is different from the annual meeting held every year at a specific date and time.
- A statutory meeting is only held once in the company’s lifetime, while an extraordinary general meeting can be held at any time and as many times as needed.
- A statutory meeting is the initial gathering of all key members who must attend if the company calls for it. An extraordinary meeting is reached in a state of emergency or urgency.
- A statutory meeting discusses a report with all the company information before the business begins. An extraordinary general meeting discusses legal matters or matters regarding the functioning of the company at present.
- It is only mandatory for public companies to hold statutory meetings, while all private, public and government sector companies can hold extraordinary general meetings.
- https://www.jstor.org/stable/20236668
- https://eprints.whiterose.ac.uk/79848/1/_2006_CLJ_92_Shareholder_Governance.pdf
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