Section 48: Variations of shareholders’ rights
This section is for varying the rights of shareholders in a company with different classes of shares.
The section, clause by clause
What the section says
In plain terms
(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,—
The rights of a specific class of shares can be changed with the written consent of at least three-fourths of the issued shares of that class, or by a special resolution at a meeting of the shareholders of that class, if allowed by the company's memorandum or articles, or if not prohibited by the terms of issue of the shares.
(1)(a)if provision with respect to such variation is contained in the memorandum or articles of the company; or
(1)(b)in the absence of any such provision in the memorandum or articles, if such variation is not prohibited by the terms of issue of the shares of that class:
provisoProvided that if variation by one class of shareholders affects the rights of any other class of shareholders, the consent of three-fourths of such other class of shareholders shall also be obtained and the provisions of this section shall apply to such variation.
(2)Where the holders of not less than ten per cent. of the issued shares of a class did not consent to such variation or vote in favour of the special resolution for the variation, they may apply to the Tribunal to have the variation cancelled, and where any such application is made, the variation shall not have effect unless and until it is confirmed by the Tribunal:
If at least 10 per cent of the issued shares of a class did not agree to the change, they can apply to the Tribunal to cancel it within 21 days, and the change will not take effect until the Tribunal confirms it.
provisoProvided that an application under this section shall be made within twenty-one days after the date on which the consent was given or the resolution was passed, as the case maybe, and may be made on behalf of the shareholders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.
(3)The decision of the Tribunal on any application under sub-section (2) shall be binding on the shareholders.
The Tribunal's decision on the application is binding on the shareholders.
(4)The company shall, within thirty days of the date of the order of the Tribunal, file a copy thereof with the Registrar. 1*
The company must file a copy of the Tribunal's order with the Registrar within 30 days of the order.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. Sub-section (5) omitted by Act 29 of 2020, s. 8 (w.e.f. 21-12-2020).
Referred to by
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.