Simple tool to Manage, File and Document compliances. Get Started for Free

EGM Explanatory Statement

EGM Explanatory Statement

What is Explanatory Statement?

The businesses to be transacted at the general meeting are divided into two categories special and ordinary businesses. The explanatory statement is required to be given in case of special businesses only.

Statement to be annexed with Notice :Explanatory  statement  is  to  be  annexed  with  every  notice  concerning  each  item  of  special  business  to  be  transacted  at  the  General  Meeting.

Who has to provide Explanatory Statements?

The following businesses transacted at annual general meeting are to be treated as ordinary businesses:

(a) the consideration of financial statements and the board’s and auditors’ reports;

(b) the declaration of any dividend;

(c) the appointment of directors in place of those retiring;

(d) the appointment of, and the fixing of the remuneration of, the auditors.

All other businesses in case of an annual general meeting and all businesses in case of an extraordinary general meeting are deemed to be special businesses.

Statement to be annexed to notice Sub-section (1) of section 102 provides for a statement setting out all the material facts concerning each item of special business to be transacted at a general meeting, to be annexed to the notice calling such meeting. Disclosures with regard to the nature of concern or interest, financial or otherwise, if any, in respect of every director and the manager, every other key managerial personnel and relatives of such persons are mandatory.

Proviso to sub-section (2) of section 102 further mandates further disclosure of interest where any item of special business proposed to be transacted at a meeting of the company relates to or affects any other company. In such case, the explanatory statement shall also specify the extent of shareholding interest of every promoter, director, manager, and key managerial personnel of the company where the resolution is proposed in that the other company. Such disclosure is required to be made if the extent of such shareholding is not less than two percent of the paidup share capital of that company. Hitherto, under the proviso to sub-section (2) of section 173, such disclosure was required only if the shareholding interest of the directors and the managers was not less than 20% of the paid up share capital of the second company.









Recent comments

Comments are closed.

Comments are closed.

Copyright @ TurboComply. All Rights Reserved.