## Variation of Shareholders' Rights – Section 48

The rights attached to the shares of any class can be varied only if all the following conditions are met.

### Step 1: Enabling Provision

There must be a provision in the MOA / AOA allowing variation of class rights.

> If no such provision exists, the terms of issue of that class must not prohibit such variation.

### Step 2: Consent of the Affected Class

Obtain the written consent of holders of at least 75% of the issued shares of that class OR pass a Special Resolution at a separate class meeting.

Cross-class impact: If the variation in one class also affects rights of another class, consent of 3/4th of that other class must also be obtained.

### Step 3: Right of Dissenting Minority (10% Rule)

Holders of at least 10% of that class who did not consent to the variation may apply to the NCLT:

Application must be made within 21 days of the consent / SR;
The variation shall not take effect until confirmed by NCLT.

### Step 4: Binding Effect & Filing

The decision of the NCLT is binding on all shareholders of that class.
The company must file a copy of the NCLT order with the ROC within 30 days of the order.

Worked example

### Example 1

Example: P Ltd. has issued 50,000 Class-1 equity shares carrying voting rights such that 5 shares = 1 vote. The company wishes to vary this to 10 shares = 1 vote. Whose consent is required?

Solution:

1. Consent of holders of at least 75% of the class shares = 37,500 shares.

2. If any other class is affected, additionally 3/4th of that other class must consent.

3. 10% dissenting holders (i.e., 5,000 shares) who did not consent may approach NCLT within 21 days, and the variation will not take effect until confirmed by NCLT.

⚠️ Common exam mistakes

Forgetting that 75% consent OR SR at class meeting is an alternative — not both required.
Missing the cross-class impact rule — variations affecting another class need 3/4th consent of that class also.
Confusing 10% threshold (right to approach NCLT) with 75% (consent threshold).
Missing the 21-day window for NCLT application and the 30-day ROC filing deadline.

Bare-Act text Section 48 · Companies Act, 2013 · click to expand

Section 48(1): Where a share capital of the company is divided into different classes of shares, the rights attached to the shares of any class may be varied with the consent in writing of the holders of not less than three-fourths of the issued shares of that class or by means of a special resolution passed at a separate meeting of the holders of the issued shares of that class.

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Variation of Shareholders' Rights [Section 48]

Worked example

⚠️ Common exam mistakes