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CS Executive · Company Law and Practice · Share and Share Capital - Concepts

Orion Engineering Ltd consolidates its shares and divides them into shares of a larger amount. Some minority shareholders would see their voting percentage change as a result. Its articles permit alteration. What does the first proviso to Section 61(1)(b) require?

Tribunal approval is required. The proviso to Section 61(1)(b) states that a consolidation and division resulting in changes in voting percentage of shareholders will not take effect unless approved by the Tribunal on an application made in the prescribed manner.

  1. AThe consolidation takes effect on passing of the resolution, with only a filing with the Registrar
  2. BThe consolidation takes effect only if approved by the Tribunal on an application made in the prescribed mannerCorrect
  3. CThe consolidation takes effect only if the affected members consent in writing
  4. DThe consolidation is prohibited absolutely

Explanation

The proviso to Section 61(1)(b) says no consolidation and division that results in changes in voting percentage of shareholders takes effect unless approved by the Tribunal on an application in the prescribed manner. Filing with the Registrar under Section 64 alone does not suffice, and the law does not prohibit it outright.

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