Articles of association—provisions for entrenchment

Published by a ��Ӱ�� Corporate expert

Practice notes

Articles of association—provisions for entrenchment

Published by a ��Ӱ�� Corporate expert

Practice notes

What are 'provisions for entrenchment'?

The usual way to amend a company's articles of association is by way of special resolution. However, it is possible to entrench provisions in the articles so that they can only be amended if certain conditions are met or certain procedures are followed. These conditions or procedures are known as 'provisions for entrenchment'. The particular article which cannot be varied without meeting the required provisions is known as an 'entrenched provision'.

The conditions to be met or procedures to be followed are usually made more restrictive than those required to pass a special resolution, but it is not possible to make a provision entirely unalterable. The Companies Act 2006 (CA 2006) makes clear that provisions for entrenchment do not prevent amendment of the company's articles by agreement of all the members of the company, or by order of a court or other authority having power to alter the company's articles. This effectively prohibits absolute entrenchment. However, if particularly difficult conditions or procedures are imposed, it may well be the case that the articles subject

Jurisdiction(s):

United Kingdom

Key definition:

Articles of association definition

What does Articles of association mean?

The principal constitutional document of a company, dealing with management and administration issues, most notably powers of directors, transfer and issue of shares, and board and member meetings. The articles form the fundamental contract between the company and the shareholders and must be available for public inspection at Companies House.

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