Class rights and variation of class rights
Class rights and variation of class rights

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Class rights and variation of class rights
  • Statutory provisions on what constitutes class rights and their variation
  • Case law on what constitutes class rights
  • Case law on what constitutes a variation of class rights
  • Determining whether there has been a variation of class rights
  • Procedure for the variation of class rights
  • Variation of class rights in accordance with articles of association
  • Variation of class rights by consent under the statutory provisions
  • Other restrictions on the variation of class rights
  • Right to object to a variation of class rights
  • More...

A company having a share capital may have separate classes of shares. As a general rule, a type of share will form a separate class from other shares in a company if the rights attached to it differ from those attaching to those other shares, but the existence of classes of shares will be determined by the courts on a case by case basis. Different classes of shares include ordinary shares, preference shares, deferred shares and redeemable shares. For further information on the classes of shares most commonly issued, see Practice Note: Different classes of share capital.

A company that does not have a share capital may have separate classes of members, with different rights.

Statutory provisions on what constitutes class rights and their variation

There is no statutory definition of class rights or variation of rights, although the Companies Act 2006 (CA 2006) does provide that:

  1. shares are of one class if the rights attached to them are in all respects ‘uniform’ (the term uniform is not defined, although the CA 2006 does provide that shares are not regarded as different simply because they do not carry the same rights to dividends in the 12 months immediately following allotment)

  2. if there is provision in a company’s articles of association for the variation of rights attached to a class of shares or rights of a class of

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