The terms “Statutory meeting” and “Extraordinary General meeting” are both related to meetings held by shareholders of the company.
Statutory Meeting vs Extraordinary General Meeting
The main 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 extraordinary general meeting is held at any time of the year other than the annual shareholder meeting.
The statutory meeting is the first meeting 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 a separate meeting that is called other than 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 Between Statutory Meeting and Extraordinary General Meeting (in Tabular Form)
| Parameters of Comparison | Statutory meeting | Extraordinary General meeting |
|---|---|---|
| Definition | It is held in the period 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. | An extraordinary general meeting can be held several times, depending on the issue. |
| Reason to call | It is the initial meet of the shareholders of the company or a customary 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 any directors or executives, urgent issues. |
| Types of company | Only public companies are obligated to hold a statutory meeting. | Here, government, private and public companies all can hold the meeting, and if forced, are mandated to keep it. |
What is Statutory Meeting?
A statutory meeting is held generally from 6 months up to one before any business is conducted by the company, which would be before the beginning of the first fiscal year of the company.
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 meet between the shareholders.
Now all companies don’t need to conduct this meeting, such as the companies belonging to the private and government sector. Only public sector companies are mandated to attend a statutory meeting, and also create a statutory 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 present on the board of directors, the shareholders and any other key members of the company.
- Cash received with respect to the shares of the company.
- The total number of shares allotted to each member of the company, including the shareholders and directors.
- Receipts and payments to vendors or for any purchases made by the company to commence business.
The meeting primarily is based on the contents of the statutory report. Members can ask doubts or raise any questions regarding the report, and if any changes are needed, the company board unanimously agrees on it, and only then can it be passed.
What is Extraordinary General Meeting?
An extraordinary general meeting is a gathering of the shareholders of the company, 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 take place several times, depending on the matter at hand.
An extraordinary general meeting can be held by companies belonging to all sectors, such as private, public and government. Now it is not a mandatory meeting, but if all the directors and shareholders agree to it, then 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 or a shareholder or any executive, through a unanimous vote.
An extraordinary general meeting is generally 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 Meeting and Extraordinary General Meeting
- A statutory meeting is held in the time 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 lifetime of the company, 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 and is mandatory to attend if the company calls for it. An extraordinary meeting is called in a state of emergency or urgency.
- In a statutory meeting discusses a statutory report that has all the information about the company before the business begins. An extraordinary general meeting discusses legal matters or matter 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.
Conclusion
A statutory meeting and extraordinary general meeting are both held to discuss the matters of the company at different durations of its functioning. Now a statutory meeting takes place only once in a company’s lifetime. Still, it is an essential session because it is the initial meeting of all the key members of the company.
While an extraordinary general meeting is held at random times and at any time of the year to discuss urgent matters such as legal issues or change of board members. These meetings play an essential role as the company progresses, as it allows the shareholders to discuss the future of the company and shape it according to their interest.
References
- https://www.jstor.org/stable/20236668
- https://eprints.whiterose.ac.uk/79848/1/_2006_CLJ_92_Shareholder_Governance.pdf