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Provisions for Entrenchment in Articles of Association (Section 5)

Relevant Provisions

• Section 5 of the Companies Act, 2013
• Rule 10 of the Companies (Incorporation) Rules, 2014

What is an entrenchment provision?

• An entrenched/ entrenchment provision is a provision that makes the current level of provisions more stringent/ difficult to follow for the coming period.

• Most of the time, this is done by making a mandate requiring the consent of more number of persons for the happening of a certain thing.

Entrenchment provisions in the articles of association
entrenchment of articles of association meaning

The articles may contain provisions for entrenchment to the effect that specified provisions of the articles may be altered only if conditions or procedures that are more restrictive than those applicable in the case of a special resolution, are met or complied with.

When can a company add provisions for entrenchment in the articles?

1) Either on formation/ incorporation of a company; or

2) by an amendment / alteration in the articles of association;
• in the case of a private company - the amendment has to be agreed to by all the members/shareholders of the company;
• in the case of a public company - the amendment has to be approved by the members by passing a special resolution.

Notice to Registrar of Companies (ROC)

• At the time of incorporation of the company, where the articles contain the provisions for entrenchment - notice to the ROC is given by filing of Form No. INC-32 (SPlCe) along with fees.

• In case of existing companies - notice to the ROC is given in Form No. MGT-14 along with fees within 30 days from the date of entrenchment of the articles. This happens in case of alteration of the articles to add entrenchment provisions.


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