VARIATION OF SHAREHOLDERS’ RIGHTS
Applicable provisions: Section 48 of the Companies Act, 2013.
Where a share capital of the company is divided into different classes of shares, the rights attached to the shares of any class may be varied from the other class of shareholders.
The consent of not less than 3/4 holders of the issued shares of that class are required by passing special resolution in the General Meeting for variation of rights.
Following conditions should be satisfied:
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1 |
This provision must be mentioned in the memorandum or articles of the company; and if not altered them accordingly: |
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If variation by one class of shareholders affects the rights of any other class of shareholders, the consent of three-fourths of such other class of shareholders shall also be obtained and the provisions of this section shall apply to such variation. |
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3 |
Where the holders of not less than 10% of issued class of shares did not consent in favour of Special Resolution, they may apply to the Tribunal to have the variation cancelled. |
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If such application is received by the Tribunal, the variation shall not effect unless and until it is confirmed by Tribunal. |
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Provided that an application under this section shall be made within 21 days after the date on which the consent was given or the resolution was passed, and may be made on behalf of the shareholders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose. |
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The decision of the Tribunal on any application shall be binding on the shareholders. |
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The company shall, within thirty days of the date of the order of the Tribunal, file a copy thereof with the Registrar. |
Disclaimer: –The above mentioned article has been based on relevant provisions of Companies Act, 2013. Under no circumstance, the author shall not liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.
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