Skip to content

CMA Intermediate · Business Laws and Ethics · Company Types, Promotion, Formation and Related Procedures

Kisan Agro Ltd, a company with fifty members, wants to add entrenchment provisions to its existing articles by amendment. Which route is correct under the Companies Act, 2013 if it is a private company and if it is a public company respectively?

For entrenchment added by amendment, a private company needs the agreement of all its members, while a public company needs a special resolution. This follows Section 5(4). In either case the company must also give notice of the provisions to the Registrar.

  1. APrivate: agreement of all members; public: special resolutionCorrect
  2. BPrivate: special resolution; public: agreement of all members
  3. CPrivate: ordinary resolution; public: special resolution
  4. DPrivate: agreement of all members; public: ordinary resolution

Explanation

Section 5(4) says entrenchment by amendment requires agreement of all members in a private company and a special resolution in a public company. Reversing them or using an ordinary resolution is wrong. Notice must also go to the Registrar under Section 5(5).

Did you get it right without looking?

One question tells you little. A timed set on Company Types, Promotion, Formation and Related Procedures shows your real accuracy, how long you take and where you lose marks.

Practise Company Types, Promotion, Formation and Related ProceduresFree diagnostic mock

More Company Types, Promotion, Formation and Related Procedures questions