ExpertHard2 marksMultiple Choice
ACCA · Question 15 · Capital and the financing of companies
A renewable energy company wants to vary the rights attached to its class of preference shares.
Under the Companies Act 2006, which TWO of the following methods can legally be used to approve a variation of class rights (assuming the articles do not specify a different procedure)?
A renewable energy company wants to vary the rights attached to its class of preference shares.
Under the Companies Act 2006, which TWO of the following methods can legally be used to approve a variation of class rights (assuming the articles do not specify a different procedure)?
Answer options:
A.
Consent in writing from holders of at least 75% in nominal value of the issued shares of that class.
B.
An ordinary resolution passed at a general meeting of all company shareholders.
C.
A special resolution passed at a separate general meeting of the holders of that class.
D.
A unilateral declaration by the board of directors.
How to approach this question
Recall the statutory requirements for varying class rights: it requires a 75% majority of the affected class, either in writing or at a meeting.
Full Answer
Under s.630 of the Companies Act 2006, if the articles do not provide a procedure, class rights can only be varied with the consent in writing of the holders of at least 75% in nominal value of the issued shares of that class, OR by a special resolution (75% majority) passed at a separate general meeting of the holders of that class.
Common mistakes
Thinking that all shareholders vote on the variation. Only the shareholders of the affected class have the right to vote on varying their specific rights.
Practice the full ACCA LW — Corporate and Business Law Practice Exam 2
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