Law · Company Law
Lux Co has both ordinary shares and 8% cumulative preference shares in issue. The directors wish to improve the company's cash position and propose a resolution to reduce the preference dividend to 5% for the next three years. A group of preference shareholders is unhappy with this proposal. Under the Companies Act 2006, what is the minimum percentage of the affected class required to successfully apply to the court to have the variation cancelled, and what must they demonstrate?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 125% of the affected class; they must prove the variation violates the company's constitution.
- 215% of the affected class; they must demonstrate that the majority did not act bona fide in the interest of the hypothetical individual member.
- 315% of the affected class; they must demonstrate that the variation is unfairly prejudicial to the members of that class.✓
- 410% of the affected class; they must prove the variation is not in the best interests of the company as a whole.
Correct answer
15% of the affected class; they must demonstrate that the variation is unfairly prejudicial to the members of that class.
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