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ACCA Applied Skills · Corporate and Business Law (Global) · Share capital

Brindle Co has 100,000 class A shares and 50,000 class B shares. The articles require the consent of holders of at least 75% in nominal value of the affected class to vary its rights. A variation affecting only class B is proposed. Holders of 36,000 class B shares vote in favour, and holders of 14,000 vote against. Class A holders all vote in favour. What is the result?

The variation fails. The 75% threshold applies to the affected class, class B, and 36,000 of 50,000 shares is only 72%. Class A votes cannot make up the shortfall, so the overall percentage across both classes is irrelevant.

  1. AThe variation is approved, because all 100,000 class A shares and a majority of class B voted in favour
  2. BThe variation fails, because only 72% of class B shares consent, below the 75% requiredCorrect
  3. CThe variation is approved, because 136,000 of 150,000 shares overall (about 90.7%) voted in favour

Explanation

The consent threshold applies to the affected class, class B. 36,000 of 50,000 is 72%, which is below 75%. Votes of class A holders do not count towards the class B consent, so the overall 90.7% is irrelevant.

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