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CMA Intermediate · Business Laws and Ethics · Rights of Shareholders

Under Section 48 of the Companies Act, 2013, once a variation of class rights is challenged by qualifying dissenting shareholders through an application to the Tribunal, what is the position of the variation?

The variation does not take effect unless and until the Tribunal confirms it. Section 48(2) makes the variation conditional on confirmation once a qualifying application is made, and the Tribunal's decision is binding on the shareholders under sub-section (3).

  1. AIt takes effect immediately and continues unless the Tribunal later cancels it
  2. BIt does not have effect unless and until it is confirmed by the TribunalCorrect
  3. CIt is automatically void and cannot be revived
  4. DIt takes effect after the company files a notice with the Registrar

Explanation

Section 48(2) states that where such an application is made, the variation shall not have effect unless and until it is confirmed by the Tribunal. The Tribunal's decision binds the shareholders under sub-section (3). Option A reverses the rule.

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