Every company sees several meetings being held on the premises in multiple locations. Well, the meaning and purpose of every meeting are different. This is where most people are tempered as they are bound to get confused between those meetings and know whether they are viable. Amongst all the meetings, the extraordinary general and statutory meetings are most talked about. Wondering why? Let’s have a look.
The meetings conducted by the shareholders of any venture are usually termed as “Statutory Meeting” or “Extraordinary General Meeting”. They have different purposes, and you might get confused between them. Therefore, we have enclosed this differential guide. To make it easy for you, keep pondering over the points.
Extraordinary General Meetings Vs. Statutory Meeting
The significant difference between the extraordinary general meeting and the statutory meeting is when it is held. If we talk about an extraordinary general meeting, it can be held any time except the annual shareholder meeting. On the other hand, the statutory meeting is only held immediately after the beginning of the first fiscal year.
A statutory meeting is considered the first gathering of the shareholders conducted before the firm is ready to trade on the stock exchange. Introductions are made here, as are final adjustments to the company strategy, and so on.
An extraordinary meeting from the annual shareholder meeting is termed an extraordinary general meeting (fixed at a particular date and time). It’s done in an emergency or when there’s a need to make a quick choice.
What is a Statutory Meeting?
A statutory meeting is convened six months to one year before the firm conducts any business, which might be before the start of the company’s first fiscal year.
This is the company’s inaugural shareholder meeting, and it will only happen once in the company’s lifespan. This meeting is crucial since it will be the first time the shareholders assemble.
All firms, including those in the private and public sectors, are no longer required to have this meeting. Only firms in the public sector are obliged to visit a statutory meeting and submit a statutory report.
The board of directors must submit a statutory report to each member of the firm 21 days before the meeting, covering different facts about the company, such as:
- Information about all members of the board of administrators, shareholders, and other important firm figures.
- Cash obtained in exchange for the company’s shares.
- The total number of shares distributed to each company member, including shareholders and directors.
- Purchases and payments to vendors, as well as any expenditures made by the firm to get started.
- The statutory meeting can only be hosted by public companies to discuss such matters.
The meeting is mostly based on the statutory report’s contents. Members can express their concerns or ask questions about the document, and if any adjustments are required, the corporate board must unanimously agree on them before it can be passed.
What is an Extraordinary General Meeting?
An extraordinary general meeting is held of the company’s shareholders conducted at an inconvenient time.
The meeting can be convened if all shareholders agree, and it takes place independently from the annual conference, which is held at a specific time and day each year. Depending on the situation, this meeting may be repeated numerous times.
Companies from all sectors, including private, public, and government, can have an extraordinary general meeting. It is no longer a necessary conference, but if all shareholders and directors agree, everyone must attend.
This meeting is convened in the event of an emergency or a pressing situation that has to be addressed, such as:
- Concerns about the company’s present operations.
- Any legal concerns that the corporation or any of its members may have
- Unanimous voting is needed to remove a director, a shareholder, or an executive.
- Any company is a private, public, or government company that can hold an extraordinary meeting as many times according to their will.
During a state of emergency, an extraordinary general meeting is called, and it can be convened on any date or time, including holidays or off days.
Difference Between Extraordinary General Meeting and Statutory Meeting
- A statutory meeting is conducted just before the start of the fiscal year. An Extraordinary general meeting takes place at an unknown time throughout the year, as opposed to the annual meeting, which takes place on a fixed day and time each year.
- A statutory meeting occurs just once throughout the company’s existence, whereas an extraordinary general meeting may occur at any instance or as many times as necessary.
- If the corporation requires it, a statutory meeting is the prime gathering of all important members and is necessary to attend. When there is an emergency or a pressing need for a meeting, it is called an exceptional meeting.
- Before the business begins, a statutory meeting analyses a statutory report containing all of the facts regarding the firm. An extraordinary general meeting addresses legal issues or concerns about the company’s current operations.
- Statutory meetings are required solely for public firms, although extraordinary general meetings are permitted for all private, public, and government-owned businesses.
Conclusion
At different times during the company’s operation, a statutory meeting and an extraordinary general meeting are conducted to address the company’s affairs. A statutory meeting is now held just once in the life of a firm. Nonetheless, it is an important session as it is the first gathering of all of the company’s major members.
A special general meeting is convened at various times throughout the year to handle pressing problems such as legal difficulties or board member changes. As the firm grows, these meetings become increasingly important since they allow shareholders to evaluate the company’s future and change it to their liking.
This write-up was a sole attempt to highlight the differences between both the meetings held in companies. So, next time someone talks about both the meetings in front of you, don’t be the one who is not aware of the things. We hope that you have got the correct information to get started on your professional journey.