Semon Ltd., a strategic investor was introduced in Raybon Pvt. Ltd. to bring a new technology or investment. Such strategic investor wishes to protect its interests in the company. Advise how he can safeguard its interes

Strategic investor may negotiate with the company to amend its articles to protect its interest. Section 5 of the Act, provide additional safeguard to prevent unauthorized alteration of articles by way of entrenchment. According to Section 5 of Companies Act, 2013, the articles may contain provisions for entrenchment to the effect that specified provisions of the articles may be altered only if conditions or procedures that are more restrictive than those applicable in the case of a special resolution, are met or complied with. This provision acts as a protection to the minority shareholders and is of specific interest to the investment community. This shall empower the enforcement of any pre-agreed rights and provide greater certainty to investors, especially in joint ventures. The provisions for entrenchment referred above shall be made either (a) on formation of a company, or (b) 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.