Differences

Difference between board meeting and extraordinary general meeting

difference between board meeting and extraordinary general meeting We explain that what is the difference between board meeting and extraordinary general meeting with table. In today’s competitive environment, many people are in the process of forming companies to reap the benefits of capital investments and the benefits of economies of scale. The formation and operation of any business is fraught with multiple complexities and compliance formalities. One of the important and mandatory compliance is holding the necessary meetings on specific frequencies.

Company meetings can be of different types and depend on the structure of the specific company. For example, a private company may have a different set of meetings compared to a public company. In addition, meetings are held at all levels of the organization. The two common types of meetings held at the top levels of leadership are the board meeting and the extraordinary general meeting.

The main difference between a board meeting and an extraordinary general meeting is that the board meeting is an annual meeting that is held to discuss the business in general, while an extraordinary general meeting is a meeting that is held carried out to discuss a specific urgent business purpose and is not carried out with a specified frequency.

However, the above is not the only difference. A comparison between both terms on certain parameters can shed light on subtle aspects:

Comparative table between the board of directors meeting and the extraordinary general meeting (in table form)

Parameter of the Comparison Meeting Extraordinary General Meeting

Sense The board meeting is a type of meeting that is held to discuss performance and overall business plans. The Extraordinary General Meeting is a meeting to discuss a specific topic or an area of ‚Äč‚Äčimmediate interest.
Purpose Discuss the general operations and results of the business, including financial results, and also discuss the plans and vision of the company. Discuss specific areas of concern or pass a special resolution or discuss any immediate or urgent hot topics
When it’s made For public companies: the first meeting must be held within 30 days of incorporation and there must be at least 4 annual meetings At any time depending on the severity of the situation / purpose to be discussed
When the first meeting was held Within 30 days after the incorporation of the company It can be done at any time depending on the need
Mandatory Yes Not
Pre programmed Yes No, but it depends, as it may be necessary to send certain notifications.
Senior management involvement Not Yes, because the issues being discussed are critical and require brainstorming and solution from top leadership minds.
Called by Board of Directors Convened by the board of directors or at the request of certain shareholders
Relevant Section of the Indian Companies Act 2013 Section 173- Meetings of the Board Section 100-Call of Extraordinary General Meeting

What is the Board of Directors?

The board meeting, as the name suggests, is a meeting of the board, that is, the board of directors of the company. The Board of Directors is responsible for visualizing the objectives and mission of the company and putting them into practice. The Board of Directors is a meeting in which it is discussed to what extent the company has achieved the objectives and what are its plans for the future.

The board meeting is a meeting requested by the directors, that is, the board. All members (i.e. shareholders) are supposed to attend this meeting to understand how the company is putting the money invested by shareholders into action.

The board meeting is a mandatory meeting. The board meeting must be held within 30 days after the incorporation of a company. In addition, there is a requirement that in a year there must be at least 4 Board meetings. Additional compliance requires that there be no more than 120 days gap between two Board meetings.

Board meeting requirements are prescribed by the government from time to time. For example, a sole proprietorship, small business, or dormant business must have at least one semi-annual board meeting, and furthermore, the interval between the two board meetings should not be less than 90 days.

The participation of the board of directors in the board meeting can preferably be done in person. The other alternative is to participate in a videoconferencing mode or even through any other audiovisual method. The recording of the minutes of the meeting must be stored.

The board meeting must be held after giving advance notice specifying the time and place of the meeting. At least 7 days’ notice is required to be provided for the Board meeting. In certain cases, a Board meeting may be called with shorter notice to discuss an urgent matter, but in this case, at least one independent director, if any, will be present at the meeting.

What is the Extraordinary General Meeting?

Extraordinary General Meeting, as its name indicates, is a meeting called by the board of directors to discuss an extraordinary matter. The Extraordinary General Meeting is called by the Board of Directors when it deems it appropriate, taking into account the issue to be discussed and the interests of the shareholders.

An Extraordinary General Meeting is being held to deliberate on some urgent and burning issues or problems facing a company. The Extraordinary General Meeting requires the participation of all senior executives since the subject discussed in this meeting is of serious importance and of immediate interest to the company.

The Extraordinary General Meeting may be called at the request of a certain category of majority shareholders. This may mean in the case of a company that has a share capital, shareholders who own not less than one tenth of said paid-up share capital that carries voting rights. In the case of a company that does not have share capital, shareholders have no less than one-tenth of the total voting power on the date of the request to hold the meeting. The shareholders making the request must establish the matters to be discussed in the request.

The Board of Directors must hold the Extraordinary General Meeting within 21 days from the date of request from certain shareholders. Interested shareholders also have the right to hold the Extraordinary General Meeting in the event of non-compliance by the Board of Directors of their request.

Main differences between board of directors and extraordinary general meeting

  • A Board meeting is held to discuss ongoing operations, company performance, results, and plans. An Extraordinary General Meeting is held to deal with any urgent or problematic matter that the company faces and that is of immediate interest to a company.
  • Board meetings will be held within 30 days of incorporation. The Extraordinary General Meeting does not have such requirements.
  • The board of directors of a public company must be held 4 times a year. The Extraordinary General Meeting does not have such requirements.
  • The Board of Directors is convened by the Board of Directors. The Extraordinary General Meeting is called by the Board of Directors or by the Board of Directors at the request of the shareholders with a specific stake in the company.
  • Board meetings may not require the participation of all senior leadership individuals. The Extraordinary General Meeting requires the participation of all senior executive leaders.
  • The meeting of the Board is detailed in Section 173 of the Indian Companies Act 2013. The Extraordinary General Meeting is dealt with under Section 100 of the Indian Companies Act 2013.

Final Thought

The Board of Directors and the Extraordinary General Meeting are two important meetings for a company. Both meetings are held for a different purpose and have certain compliance mandates as prescribed by law.

From a practical perspective, it is important to know that, as a shareholder or member of any company, there is the right to participate in the Board of Directors and the Extraordinary General Meeting to evaluate the performance of the company and the benefits of the capital investment. At the same time, there is an additional right to request the holding of an Extraordinary General Meeting, the right of which is only available to certain shareholders.

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