STATUTORY PROVISIONS:
Article 4 of Table A permits a company to vary the rights attached to any class of shares if the proposed variation is consented to in writing by the holders of three-fourths of the issued shares of that class or is sanctioned by a special resolution passed at a separate general meeting of the holders of the shares of the class.
The purpose of this article is to protect the minority members in a company against the majority members in the company by ensuring that they do not hold a joint meeting in which the majority class could pass a resolution for variation of the minority's rights despite their opposition. Such a resolution would not be a fair one as it would effectively enable the majority forcibly to modify or appropriate to themselves some rights of the minority. However, the fundamental flaw in the article is its failure to make provision for the protection of the minority members in the minority class. This omission has been compensated for by Section 74 of the Act which entitles the holders of not less in the aggregate than fifteen per cent of the issued shares of the class being varied to apply to the court to have the variation cancelled, provided that they did not consent to or vote in favour of the resolution for the variation.