Introduction to companies act 2013

Explian the topic of entrenchment provision in AOA



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Answers (1)

An Entrenchment clause of a basic law or constitution is a provision which makes certain amendments either more difficult or impossible. Entrenchment of provisions of Articles of Association is covered under sub section (3),(4) and (5) of Section 5 of the Companies Act, 2013 read with Rule 10 of the Companies (Incorporation) Rules, 2014, which is new provision introduced under the act and the same are summarised as follows: Article of Association contains provisions for entrenchment for giving an effect that the specified provisions of AOA may be altered only if conditions or procedures as are more restrictive are met or complied with. Provisions shall only be made either at the time of incorporation of a company, or at the time of amending AOA In case of â??New Companyâ?? i. For PART I Company (i.e. Company authorized to register under this Act under Section 366) and Company with more than Seven Subscribers specify entrenched articles in Form NO. INC 7 during Incorporation. ii. All other companies specify entrenched articles in Form INC 32 (Spice )or INC 2 or INC 7 as the case may be during incorporation In case of â??Existing Companyâ?? i. â??Private Companyâ?? AOA provisions shall be entrenched by all the members of Company, by passing Board Resolution. ii. In case of â??Public Company:, AOA provisions shall be entrenched by all the members of Company, by passing Special Resolution. Rule 10 of the Companies (Incorporation) Rules, 2014: In case of existing company, e-form MGT-14 shall be filed with Registrar within 30 days along with: i. Resolution agreed by all the members/ Special resolution ii. Notice & explanatory statement. iii. Copy of altered AOA.

Madhuri Veluri

Madhuri Veluri

CA Inter



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