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CS Executive · Company Law and Practice · Members and Shareholders

Zenith Polymers Ltd has equity shares and 8% preference shares. Its articles contain a provision permitting variation of the rights of any class of shares. The company wishes to vary the rights of the preference class by obtaining written consent. What minimum level of consent from the holders of the issued preference shares is required under Section 48?

Written consent of holders of not less than three-fourths of the issued shares of the class is needed. Alternatively, a special resolution at a separate meeting of that class may be passed, provided the articles or memorandum permit variation or the terms of issue do not prohibit it.

  1. AHolders of not less than one-half of the issued shares of that class
  2. BHolders of not less than three-fourths of the issued shares of that classCorrect
  3. CHolders of not less than two-thirds of the issued shares of that class
  4. DHolders of not less than nine-tenths of the issued shares of that class

Explanation

Section 48(1) allows variation with the written consent of holders of not less than three-fourths of the issued shares of that class, or by special resolution at a separate class meeting. Two-thirds is the figure often confused with ordinary majority thresholds in other contexts and is not what the section prescribes.

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