Company Law and Practice · Members and Shareholders

Variation of Shareholders' Rights under Section 48

Updated 11 October 2026 · Fact-checked

Under Section 48 of the Companies Act, 2013, rights of a class of shares can be varied only with written consent of holders of at least three-fourths of the issued shares of that class, or a special resolution at a separate class meeting. The variation must be allowed by the memorandum or articles, or not be prohibited by the terms of issue.

Understand Variation of Shareholders' Rights (Section 48)

A company can issue shares in different classes, such as equity and preference shares. Each class carries its own rights, for example a fixed dividend or priority in repayment. These rights are part of the bargain the holder made when buying. The majority of the company cannot simply change them.

Section 48 sets the protection. It applies where the share capital is divided into different classes. To vary the rights of one class, you need the consent in writing of holders of not less than three-fourths of the issued shares of that class, or a special resolution passed at a separate meeting of the holders of that class. The vote is of the class, not of the whole company.

There is also a gate before the vote. The variation must be provided for in the memorandum or articles. If they are silent, the variation is allowed only if the terms of issue of that class do not prohibit it. If neither condition is met, the three-fourths consent does not help.

If the variation by one class affects the rights of another class, the consent of three-fourths of that other class must also be obtained. Think of a cut in the preference dividend that raises equity dividend: both classes may be affected.

Minority protection comes next. Holders of not less than 10% of the issued shares of the class who did not consent or vote in favour may apply to the Tribunal to have the variation cancelled. Until the Tribunal confirms it, the variation has no effect. The Tribunal's decision binds the shareholders. Students often search for a 30-day period: the application must be made within 21 days, while 30 days is the time for the company to file the Tribunal's order with the Registrar.

Key rules to remember

Consent needed for variation: Written consent of holders of ≥ 3/4 of the issued shares of the class, OR special resolution at a separate meeting of that class; Three-fourths is counted on issued shares of that class when consent is in writing.
Pre-condition for variation: Provision in memorandum or articles, OR (if none) variation not prohibited by terms of issue; Check this before counting votes.
Affected other class: If another class is affected, ≥ 3/4 consent of that class is also needed; Section 48 then applies to that variation as well.
Dissenters' right to apply: Holders of ≥ 10% of issued shares of the class who did not consent or vote in favour may apply to the Tribunal; Variation has no effect until the Tribunal confirms it.
Time limit for application: Within 21 days after the consent was given or the resolution was passed; Application may be made by one or more persons appointed in writing by the dissenters.
Filing of Tribunal order: Company files a copy of the order with the Registrar within 30 days of the date of the order; This is the 30-day period in Section 48. It is not the time to apply.

How to solve Variation of Shareholders' Rights (Section 48) questions

Use this order for any question on varying class rights. It follows the section and keeps your answer in the provision, facts, conclusion format.

1Identify whether the share capital is divided into classes and which class's rights are being varied.
2Check the gate: is variation provided for in the memorandum or articles? If not, do the terms of issue prohibit it?
3Identify the mode: written consent of three-fourths of the issued shares of the class, or a special resolution at a separate class meeting.
4Calculate the three-fourths figure on the issued shares of that class and compare it with the consent given.
5Check whether another class is affected. If so, test three-fourths consent of that class too.
6Test the dissenters: do those who did not consent hold at least 10% of the class? If yes, they may apply to the Tribunal within 21 days.
7State the effect: the variation stands, or does not take effect until the Tribunal confirms it. Add the filing of the order with the Registrar within 30 days.
8Write a clear conclusion citing Section 48.

Quickest way: Gate, three-fourths, ten per cent, 21 days

When to use it: For short problems with share numbers where you must say whether the variation is valid and whether dissenters can object.

Gate: articles or memorandum permit it, or terms of issue do not prohibit it.
Take three-fourths of the issued shares of the class only. Ignore other classes unless they are affected.
Consent at least that number: valid. Less: not validly varied.
Dissenters = issued shares of class minus those who consented. Compare with 10%.
If 10% or more, they may apply to the Tribunal within 21 days of the consent or resolution.

Common mistakes in Variation of Shareholders' Rights (Section 48)

Counting three-fourths of all shares of the company instead of the affected class.
Students mix this with general meeting voting, where all equity shares count.
Fix: Section 48 speaks of the issued shares of that class. Use only that class's figure.
Ignoring the pre-condition in the memorandum, articles or terms of issue.
The numbers look easier to test, so the gate is skipped.
Fix: Always state the gate first. A prohibited variation fails even with 100% consent.
Saying dissenters must apply within 30 days.
The 30-day filing period in the same section is confused with the application period.
Fix: Application to the Tribunal: 21 days. Filing the Tribunal's order with the Registrar by the company: 30 days from the order.
Treating any dissenting holder as entitled to apply.
Students forget the minimum holding.
Fix: Dissenters must hold not less than 10% of the issued shares of the class who did not consent or vote in favour.
Forgetting that the variation has no effect while the Tribunal application is pending.
Students assume that valid consent makes the variation effective at once.
Fix: Once an application is made, the variation does not take effect unless and until the Tribunal confirms it.
Overlooking the effect on another class.
The question focuses on one class.
Fix: Ask whether the change hurts or alters the rights of another class. If so, add three-fourths consent of that class.

Worked examples

Example 1

Alpha Ltd has 2,00,000 preference shares issued. Its articles allow variation of class rights. Holders of 1,60,000 preference shares give written consent on 3 March to change the dividend terms. Holders of the remaining 40,000 shares object. Is the variation valid, and what can the objectors do?

Show the solution

Provision: the articles permit variation, so the gate is satisfied.
Three-fourths of 2,00,000 = 1,50,000 shares.
Consent received is 1,60,000 (80%), which is not less than 1,50,000. The consent requirement is met.
Dissenters hold 40,000 shares = 20% of the class, which is not less than 10%.
They may apply to the Tribunal to cancel the variation within 21 days of 3 March, that is by 24 March.
If they apply, the variation will not have effect unless and until the Tribunal confirms it.

Answer: The variation is validly consented under Section 48(1). The dissenters hold 20% of the class and may apply to the Tribunal by 24 March. If they apply, the variation takes effect only on Tribunal confirmation, and the company must file the order with the Registrar within 30 days of the order.

Example 2

Beta Ltd has 5,000 issued preference shares. The terms of issue do not prohibit variation, and the articles are silent. Holders of 3,700 shares consent in writing to reduce the rate of dividend. Is the variation valid?

Show the solution

Gate: the articles are silent, so check the terms of issue. They do not prohibit variation, so the gate is satisfied.
Three-fourths of 5,000 = 3,750 shares.
Consent is 3,700, which is less than 3,750.
Written consent therefore falls short. The company may still try a special resolution at a separate meeting of this class.

Answer: The variation is not validly made by written consent, because 3,700 shares are below the required 3,750. It can proceed only if the consent reaches three-fourths of the class, or a special resolution is passed at a separate meeting of the preference shareholders.

Exam tips

Begin every answer with the Section 48 gate, then the three-fourths rule. Examiners look for both.
Write the two periods clearly: 21 days for the application to the Tribunal, 30 days for filing the Tribunal's order with the Registrar.
Do the arithmetic in full: three-fourths figure, consent received, dissent percentage against 10%.
Link related provisions in longer answers: preference voting rights under Section 47 and the use of Section 48 in a scheme under Section 230(7)(c).
Close with a one-line conclusion that states whether the variation is valid and what remedy exists.

Practice questions from Members and Shareholders

Variation of Shareholders' Rights (Section 48) in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CMA IntermediateVariation of Shareholders' Rights (Section 48)

Variation of Shareholders' Rights (Section 48): frequently asked questions

What is the consent needed to vary class rights under Section 48?

You need written consent of holders of not less than three-fourths of the issued shares of that class. The alternative is a special resolution passed at a separate meeting of that class. The memorandum or articles must allow the variation, or the terms of issue must not prohibit it.

Within how many days can dissenting shareholders apply to the Tribunal?

Within 21 days after the date the consent was given or the resolution was passed. The 30-day period in Section 48 is different. It is the time for the company to file a copy of the Tribunal's order with the Registrar.

Who can apply to the Tribunal under Section 48?

Holders of not less than 10% of the issued shares of the class who did not consent or vote in favour. The application can be made on their behalf by one or more of them appointed in writing for the purpose.

Is the variation effective while the Tribunal application is pending?

No. Once an application is made, the variation has no effect unless and until the Tribunal confirms it. The Tribunal's decision is binding on the shareholders.

How is Section 48 connected to a scheme of arrangement?

If a compromise or arrangement sanctioned by the Tribunal results in variation of shareholders' rights, the order under Section 230 provides that it is given effect under Section 48.