{Question}
In context of share capital,Which of the followings constitutes of variation of class rights?
a) Subdividing shares of another class with incidental effect of increasing voting strength of that other class.
b) Changing the amount of dividend payable to a class of preference shares?
Sir, isn't the first option equally correct?
Because increasing voting rights also created different variation doesn't they?
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Variations class rights
Hi Sourav,
Option 1 would not be a "variation of class rights" because it is "incidentally" increasing the voting strength of another class. The authority for this is the case of Greenhalgh v Ardene Cinemas Ltd 1946.
Please read this case to provide clarity as to why it is not a variation.
Kind regards,
Vijay
Thanks for reference.
Sir but I have a doubt does Class means different class of shares like preference and ordinary whilst variation is the variety of the rights that exists WITHIN the aforementioned 2 classes.?
Hi Sourav,
Class does indeed refer to shares like ordinary and preference.
Variation does not mean variety. It means an attempt to change/alter the rights of a shareholder in respect of voting/dividends/return of capital.
I hope that helps.
Vijay
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