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In 20X5 two newspaper companies, Kudos Ltd and Lux Ltd, entered into an agreement in an attempt to
safeguard their independent positions. Under the agreement, Kudos Ltd purchased 20% of Lux Ltd’s
preference shares which carry a preferred dividend of 10%.
The board of directors of Lux Ltd have recently become disenchanted with their link with Kudos Ltd and
want encourage Kudos Ltd to sell its preference share in the company. To do this, the board of Lux Ltd
proposes to reduce the dividend on all preference shares to 5%.Sir here can Kudos Ltd prevent the
reduction of the preference dividend ?I believe that the preference shareholders could prevent the alteration, yes
OK?
1)Sir here as Kudos ltd hold over 15% of the shares in the class so it could apply to
the court for the variation to be cancelled na?
2) Will court cancel the variation or will it approve the variation?That’s entirely up to the Court to decide
If it were a black / white situation it probably wouldn’t even go to Court
I suppose that there must be some reason that the directors could put forward to show that the alteration would be for the benefit of the company as a whole but that looks unlikely to me
So, probably, yes Kudos can certainly apply to the Court and, yes, it would probably be the Court’s decision to prevent the alteration
OK?
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