Extraordinary General Meeting Requisition And Powers.
EXTRAORDINARY GENERAL MEETING (EGM): REQUISITION AND POWERS
(Companies Act, 2013)
1. Meaning and Purpose of Extraordinary General Meeting
An Extraordinary General Meeting (EGM) is a general meeting of shareholders convened between two Annual General Meetings to transact urgent or special business that cannot wait until the next AGM.
EGMs are critical for:
Immediate shareholder approval
Addressing corporate emergencies
Enforcing shareholder control over management
2. Statutory Framework Governing EGMs
The primary statutory provisions are:
Section 100 – Calling of EGM
Section 101 – Notice of meeting
Section 102 – Explanatory statement
Section 103 – Quorum
Sections 104–107 – Chairman and voting
Section 110 – Postal ballot (where applicable)
3. Authority to Call an EGM
An EGM may be called by:
Board of Directors (Suo motu)
Requisitionists (Members)
National Company Law Tribunal (NCLT)
4. Requisition of EGM by Members (Section 100(2))
4.1 Eligibility of Requisitionists
Members holding:
At least 1/10th of paid-up share capital carrying voting rights, or
1/10th of total voting power (for companies without share capital)
may requisition an EGM.
4.2 Contents of Requisition
The requisition must:
State the objects of the meeting
Be signed by requisitionists
Be deposited at the registered office
5. Board’s Obligations on Valid Requisition
Upon receiving a valid requisition:
Board must proceed to call EGM within 21 days
Meeting must be held within 45 days of requisition deposit
Failure to do so triggers member powers.
6. Requisitionists’ Right to Convene EGM
If the Board fails to act:
Requisitionists may themselves call the EGM
Meeting must be held:
Within 3 months from requisition date
At the registered office or same city/town
Expenses are reimbursable by the company
7. Tribunal’s Power to Order EGM (Section 98)
The NCLT may order an EGM:
On application by:
Directors, or
Members entitled to vote
When:
It is impracticable to call a meeting otherwise
Board or requisition mechanism fails
Tribunal may:
Fix time and place
Appoint Chairman
Specify quorum (even one member)
8. Powers Exercised Through EGM
EGMs may approve:
Removal of directors
Alteration of Articles
Issue of further shares
Related party transactions
Amalgamation approvals (where applicable)
Any matter requiring special resolution
EGMs ensure shareholder supremacy over extraordinary matters.
9. Legal Consequences of Non-Compliance
Failure to comply with EGM requisition provisions may lead to:
Tribunal intervention
Penalties on officers in default
Invalidation of board actions
Minority shareholder oppression claims
10. Judicial Interpretation and Case Laws
1. LIC of India v. Escorts Ltd.
Issue: Shareholder power to influence corporate decisions.
Held:
Shareholders are entitled to requisition meetings to protect their interests.
Significance:
Judicial recognition of shareholders’ statutory right to requisition EGM.
2. Cricket Club of India Ltd. v. Madhav Apte
Issue: Board’s refusal to convene requisitioned meeting.
Held:
Board cannot frustrate members’ statutory rights.
Significance:
Reinforces mandatory compliance with Section 100.
3. B. Mohanlal v. K.M. Keshava
Issue: Validity of requisition content.
Held:
Requisition must clearly state the objects; vague requisitions are invalid.
Significance:
Clarifies procedural requirements for valid EGM requisition.
4. Re: El Sombrero Ltd.
Issue: Tribunal/court intervention in calling meetings.
Held:
Courts can order meetings when corporate machinery breaks down.
Significance:
Foundation for Section 98 tribunal powers.
5. National Textile Workers’ Union v. P.R. Ramakrishnan
Issue: Broader corporate governance responsibilities.
Held:
Corporate decisions must respect stakeholder interests and transparency.
Significance:
EGMs as instruments of accountability.
6. T.V. Sundaram Iyengar & Sons (P) Ltd. v. Official Liquidator
Issue: Member rights in extraordinary situations.
Held:
Shareholder meetings are essential for validating extraordinary corporate acts.
Significance:
Highlights necessity of EGMs in exceptional circumstances.
7. Foss v. Harbottle
Issue: Majority rule through general meetings.
Held:
Company acts through resolutions passed in general meetings.
Significance:
Legal basis for EGM resolutions binding the company.
11. EGM as a Governance Safeguard
The EGM:
Acts as a check on board dominance
Protects minority shareholders
Enables urgent decision-making
Reinforces shareholder sovereignty
Courts consistently prevent boards from circumventing or delaying EGMs.
12. Conclusion
The Extraordinary General Meeting is a powerful statutory tool that ensures shareholder control over urgent corporate decisions. Section 100 of the Companies Act, 2013 grants enforceable rights to members, imposes mandatory duties on boards, and empowers tribunals to intervene when corporate democracy is threatened.
Judicial precedents underscore that:
EGM requisition rights are statutory and enforceable
Board obstruction is legally impermissible
Tribunal powers ensure corporate functionality
Thus, EGMs play a vital role in corporate accountability, minority protection, and sound governance.
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