proposal to reduce the votes of preference


Proposal to reduce the votes of preference shares:

In making this approach the courts have nonetheless kept the door open for action to deal with discrimination against a class by indirect means.  In the Bristol Aeroplane Case it was said (as an obiter dictum) that if the ordinary shareholders had passed a resolution simply to double the votes attached to the ordinary shares this would have been a variation of the voting rights of preference shares (to which the safeguards described above would apply).

A class of shares may carry different rights in one respect (e.g. a preference dividend) but the same rights as other classes in other respects.  Because of the difference it ranks as a class to which the safeguards apply.  This is so even when the class right to be varied is shared with the other class.  Suppose, for example, the articles give one vote per share to both ordinary and preference shares.  A proposal to reduce the votes of preference shares to, say, 1 vote for 10 preference shares is a variation of a class right since it is enjoyed by that class (and also by the ordinary shareholders).

S.74(4) provides that the decision of the court on any application shall be final.  the company must deliver a certified copy of the court order to the registrar within thirty days after the making of the order.

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Business Law and Ethics: proposal to reduce the votes of preference
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