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CS Executive · Company Law and Practice · Members and Shareholders

Orchid Pharma Ltd proposes to vary the rights of its Class X preference shares in a way that also adversely affects the rights of its Class Y preference shares. Class X holders have validly approved the variation by the required majority. What additional step does Section 48 require?

Consent of three-fourths of the affected Class Y shareholders must also be obtained, and the provisions of Section 48 apply to that variation as well. Approval by Class X alone is insufficient, though unanimity of Class Y is not required.

  1. AOnly a simple majority of equity shareholders in general meeting
  2. BConsent of three-fourths of the Class Y shareholders must also be obtained, and Section 48 applies to that variationCorrect
  3. CNo further step, since only the class whose rights are varied needs to consent
  4. DUnanimous consent of the Class Y shareholders

Explanation

The proviso to Section 48(1) says that if variation by one class affects the rights of any other class, the consent of three-fourths of such other class must also be obtained and the section applies to that variation. Unanimity is not required, and the affected class cannot be bypassed.

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