Companies Act 2013 - Section 5 Overview

A provision in the articles of association that makes specific articles more difficult to change. This can be achieved by requiring a more stringent approval process, such as a higher percentage of shareholder votes or a unanimous decision by the members.

By enacting an entrenchment provision in the articles, requiring stricter procedures for modification, such as a specific majority vote or unanimous agreement.

For a private company, entrenchment can be included either at the formation of the company or by amendment, provided all members agree. For a public company, entrenchment can be added by way of a special resolution.

If the articles contain an entrenchment provision, the company must inform the Registrar of Companies about this provision. It's a legal requirement to notify the Registrar and file the necessary documents.

As the owner of a private company, Mr. Shyamlal can protect his position as director for life by making the article about his directorship 'entrenched'. This means that unless a certain % of shareholders (e.g., 95%) agree, he cannot be removed from his position.

The non-family members may be able to call for a special resolution to change the articles of association, potentially affecting the protection of the entrenched provision.

Yes, but only if the stipulated stricter conditions are met. For example, a higher percentage of shareholder votes might be needed than for a regular change, or it may require unanimous agreement.

Section 5 of the Companies Act 2013 outlines provisions for entrenchment, which allows companies to create more secure, more difficult-to-change articles. Entrenchment helps ensure that certain provisions remain in effect even if there's pressure to change them.