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CMA Intermediate · Business Laws and Ethics · Rights of Shareholders

A class of shares of Rao Industries Ltd is varied by a special resolution passed on 1 March at a separate class meeting. Holders of 12% of the issued shares of that class did not vote in favour. Which statement is correct under section 48?

Dissenting holders of 12%, being at least ten per cent of the class, may apply to the Tribunal within twenty-one days of the resolution. The variation has no effect until the Tribunal confirms it, and the Tribunal's decision binds the shareholders.

  1. AThey may apply to the Tribunal within twenty-one days of the resolution, and the variation has no effect until the Tribunal confirms itCorrect
  2. BThey may apply to the Tribunal within thirty days, and the variation takes effect meanwhile
  3. CThey cannot apply, as only holders of at least 25% may object
  4. DThey may apply to the Registrar, whose decision is final

Explanation

Under section 48(2), holders of not less than ten per cent of the issued shares of the class who did not consent or vote in favour may apply to the Tribunal within twenty-one days. Here 12% exceeds 10%. The variation does not take effect until confirmed by the Tribunal. Thirty days applies to the company filing the Tribunal order with the Registrar, not to the application.

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