Worked Solution
✓ Verified(i) Whether a company can change the rights of its shareholders:
Under Section 48(1) of the Companies Act, 2013, where the share capital of a 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 (3/4th) of the issued shares of that class, provided such variation is not prohibited by the Memorandum or Articles of Association, or where authorised by them.
In the present case, MNO Limited has Class-2 equity share capital of 50,000 equity shares. The holders of 40,000 equity shares have given their consent in writing.
Consent obtained = 40,000 / 50,000 = 80%, which is more than the required 75% (3/4th).
Further, the Memorandum and Articles of Association expressly authorise the company to make such variation.
Since both conditions are satisfied, MNO Limited can validly vary the voting rights of Class-2 shareholders from 1 voting right per 5 shares to 1 voting right per 10 shares.
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(ii) Whether the dissenting shareholders can apply to the Tribunal:
Under Section 48(2) of the Companies Act, 2013, if the variation is opposed by the holders of not less than 10% of the issued shares of that class who did not consent to the variation, such dissenting shareholders may apply to the National Company Law Tribunal (NCLT) to have the variation cancelled. The application must be made within 21 days of the date on which the consent was given.
In the present case:
- Total Class-2 issued shares = 50,000
- Shareholders who consented = 40,000
- Dissenting shareholders = 50,000 − 40,000 = 10,000 shares
- Minimum required to apply to Tribunal = 10% of 50,000 = 5,000 shares
- Holders who actually wish to apply = 4,500 shares
Since 4,500 shares < 5,000 shares (the 10% threshold), the dissenting shareholders do not meet the minimum requirement under Section 48(2).
Conclusion: The dissenting shareholders holding 4,500 equity shares cannot apply to the Tribunal as they fall short of the statutory minimum of 10% of the issued shares of the class required to make such an application.
Write it like this
1The skeleton
- Split your answer into two clearly labelled parts (i) and (ii) — examiners are checking two separate legal issues and will award marks part-wise, so mixing them costs you sub-marks even if the analysis is correct.
- Cite Section 48(1) before anything else in part (i) — open with 'Under Section 48(1) of the Companies Act, 2013' so the examiner ticks the provision box in the first line, not after reading your whole paragraph.
- Show the 3/4th calculation explicitly as a fraction — write '40,000 / 50,000 = 80% > 75%' on its own line; naked conclusions without working get zero marks for that step even if the conclusion is right.
- In part (ii), anchor the 10% threshold to Section 48(2) before doing the math — state the rule, THEN apply it; reversing this order makes it look like you're retrofitting the law to the answer.
- End each part with a one-line conclusion in bold — 'MNO Limited can validly vary…' and 'The dissenting shareholders cannot apply…' — examiners are trained to scan for these closing lines when awarding the final conclusion mark.
2Examiner-rewarded phrases
3Common trap
Watch out — most students forget to check both conditions for Section 48(1): the 3/4th consent AND the MoA/AoA authorisation. If you only calculate the 80% and stop, you drop a mark because the examiner expects you to explicitly confirm the MoA/AoA condition is also met.