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CS Executive · Company Law and Practice · Members and Shareholders

Kaveri Foods Ltd has 1,000 issued Class B preference shares. A variation of Class B rights was approved by a special resolution at a separate class meeting, with holders of 880 shares voting in favour and holders of 120 shares not agreeing. Does the dissenting group have a right to apply to the Tribunal?

Yes. The dissenters hold 12 per cent of the class, which is not less than ten per cent of the issued shares, so under Section 48(2) they may apply to the Tribunal to cancel the variation, even though the required three-fourths majority approved it.

  1. ANo, because the variation was approved by more than three-fourths
  2. BYes, because holders of not less than ten per cent of the issued shares of the class did not consent or vote in favourCorrect
  3. CNo, because only holders of equity shares can approach the Tribunal
  4. DYes, but only if all the dissenting holders are present at the meeting

Explanation

Dissenting holders are 120 of 1,000 shares, i.e. 12%, which is not less than ten per cent. Under Section 48(2) they may apply to the Tribunal to have the variation cancelled. Passing the resolution by the required majority does not remove this right.

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