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Microlesson · 5-min read

Section 48 - Variation of Shareholders' Rights

# Section 48 — Variation in Shareholders' Rights

## Conditions for Variation

Rights of any class of shareholders may be varied with:

1. Consent in writing of holders of 3/4th of issued shares of that class, OR

2. Special Resolution (SR) passed at a separate meeting of that class.

### Pre-condition

Provision for variation must be given in the AOA / MOA, OR — in the absence of such provision — variation must not be prohibited by the terms of issue.

## Cross-class Impact

If variation of one class affects the rights of another class, consent of 3/4th of such other class is also required (consent in writing OR SR).

## Resistance (Right to Object)

  • Shareholders holding at least 10% of the issued shares of that class who did NOT consent to the variation may apply to the Tribunal.
  • Time limit: within 21 days of the consent / SR.
  • Tribunal can cancel the variation.
  • On such application, the variation shall not have effect until confirmed by the Tribunal.

## Tribunal Order

  • Binding on the shareholders and the company.
  • Final — no appeal.
  • A copy of the order must be filed with the ROC within 30 days.

Worked example

### Example 1

Example: Class A shareholders' rights are being varied by Special Resolution. 12% of Class A shareholders dissent. Can they approach the Tribunal?

Answer: Yes. Since they hold at least 10% of the issued shares of that class and did not consent, they may apply to the Tribunal within 21 days of the SR being passed. The variation will not take effect until the Tribunal confirms it.

⚠️ Common exam mistakes

  • Confusing the 3/4th consent requirement with 3/4th majority of votes cast at a general meeting.
  • Missing the 21-day time limit for application to the Tribunal.
  • Forgetting that consent from another affected class is also required.
  • Not filing the Tribunal order with ROC within 30 days.
Bare-Act text Section 48 · Companies Act, 2013 · click to expand
Section 48 of the Companies Act, 2013 — Variation of shareholders' rights.
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