Shares: variation of rights
Registration of rights appertaining to classes of shares and variations in those rights are regulated by the Companies Act 1985 with provisions first introduced in the 1980 Companies Act. Alterations to rights attaching to particular classes of shares, being those detailed in the memorandum of association or articles of association or in any resolution that has been filed, must be notified to the Registrar of Companies, who will then gazette such information. If a company wishes to vary the rights attaching to any class of shares, then the procedure differs according to whether or not a provision for variation is included in the memorandum or the articles. If no provision is contained, then (1) where the rights are set out in the memorandum, any variation requires the consent of all shareholders in that class, and (2) where the rights are specified in the articles or elsewhere, then the consent of 75 per cent of class members or an extraordinary resolution of that class must be obtained before any variation is possible.
Where a provision for variation is contained in the memorandum or the articles, then with certain reservations that provision must be adhered to, with the proviso that if an alteration is effected, then holders of 15 per cent or more of the shares in that class may apply to the court for the variation to be cancelled. Alterations to the articles directed at changing the rules regarding variation of class rights are treated in the same way as the variation itself. These regulations, contained in the 1985 Companies Act, allow for variations previously only possible under a scheme of arrangement.
Reference: The Penguin Business Dictionary, 3rd edt.