What are provisions for entrenchment?
In general a company can change its articles by special resolution (ie a vote passed by three-quarters of those participating). If a company’s articles contain restrictions on making changes so that specified articles can be changed only if conditions are met or procedures are complied with that are more restrictive than those for a special resolution, then those articles contain provision for entrenchment. For companies formed under the Companies Act 2006, any provisions in the articles that cannot be changed by special resolution can be changed by unanimous agreement of the members of the company. This is the effect of section 22(3)(a). Companies formed under the Companies Act 1985, or earlier legislation, may have entrenched provisions that can be amended only with something more than or different from a unanimous agreement of the members, such as the agreement of a third party, or may simply not allow of amendment under any circumstances. Such entrenchments in pre-existing companie
