Entrenchment provisions
This query is : Resolved
Divyanshu Arora
(Querist)
29 November 2014
How to explain entrenchment provisions in a simpler manner?
CS Mitesh Mehta
(Expert)
01 December 2014
Companies can now include entrenchment provisions within their articles of association. An entrenchment provision is a provision which can only be amended or
removed by a vote of such number of shareholders exceeding that number that would be required for a special resolution. As a result, minority protection provisions can now be included within articles of association without fear of their amendment or removal by a special resolution, thereby providing rights to minority investors which could previously only be reflected in a shareholders’ agreement. The adoption of any entrenchment provisions must be notified to the Register of Companies within 30 days.
removed by a vote of such number of shareholders exceeding that number that would be required for a special resolution. As a result, minority protection provisions can now be included within articles of association without fear of their amendment or removal by a special resolution, thereby providing rights to minority investors which could previously only be reflected in a shareholders’ agreement. The adoption of any entrenchment provisions must be notified to the Register of Companies within 30 days.
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