Evergreen Private Limited has9 directors on its Board of Directors. The company's Articles of Association currently state that the quorum for board…
CA Foundation · Business Laws · MTP · September 2025
Evergreen Private Limited has9 directors on its Board of Directors. The company's Articles of Association currently state that the quorum for board meetings shall be - 1/3 rd of the total strength or2 directors, whichever is higher. The company now intends to amend this article to specify that the quorum for board meetings shall be - 1/3 rd of the total strength or4 directors, whichever is higher. Advise the company on the procedure for including this entrenchment provision in its Articles, in accordance with the provisions of the Companies Act, 2013. Would your advice differ if the company were a public company?
Suggested Answer and Working Notes:
Section 5 (4) and (5) of the Companies Act,2013 contains the following provisions: Manner of inclusion of the entrenchment provision: The provisions for entrenchment shall only be made either on formation of a company, or by an amendment in the articles agreed to by all the members of the company in the case of a private company and by a special resolution in the case of a public company. Notice to the registrar of the entrenchment provision: Where the articles contain provisions for entrenchment, whether made on formation or by amendment, the company shall give notice to the Registrar of such provisions in such form and manner as may be prescribed. In the instant case, Evergreen Private Limited can follow the above procedure i.e. with the consent of all the members and notice to the registrar to include the entrenchment provision in its Articles. Yes, the advice will differ, if the company is public company, since it has to pass Special Resolution and also inform to the registrar.
Topics: The Companies Act, 2013
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