CA Inter P2 · Chapter 2 · Question 4 of 11
Under section 5(3) and (4), entrenchment provisions can be included in the articles of a public company:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Only on formation, or by an amendment agreed to by special resolution
Explanation
Section 5(3) allows the articles to contain entrenchment provisions, under which specified provisions can be altered only if conditions more restrictive than a special resolution are met. Under section 5(4) they may be made on formation or by an amendment. In a private company the amendment needs the agreement of all members; in a public company it needs a special resolution.
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