1. IS THERE A VARIATION OF CLASS RIGHTS?
STATUTORY DEEMED VARIATIONS
Note: Look at whether there is a statutory deemed variation first before looking at common law. S 246C sets out 4 situations where it is deemed to be a variation: 1. Division of shares in a class into further classes – s 246C(1):
* If the shares in a class of shares are divided into further classes, and after that happens the rights attached to all those shares are not the same then the division is taken to vary the rights attached to every share that was in the class existing before the division.
2. Variation of rights attached to some of the shares in a class – s 246C(2):
* If the rights attached to some of the shares in a class are varied then the variation is taken to vary the rights attached to every other share that was in the class existing before the variation. * E.g. you have ‘class A shares’ and the company only varies rights for some of the class A shareholders and not all of them. This is a variation.
3. Company with one class of shares issuing new shares – s 246C(5):
* If the company only has one class of shares and then they issue new shares and after that has happened the rights attached to the new shares are not the same as the rights attached to the pre-existing shares then it is a variation. * However a company can still validate this if this is provided for in its constitution or a notice or document or resolution is lodged with ASIC; s 246C(5)(b). * Re Phylogica Ltd 2005 – a company inadvertently contravened this section by issuing a class of shares with different rights to its existing class of shares and did not provide the rights for the new class in the company constitution or provide a notice to ASIC as required. The court then validated the terms of the issue of new class of shares pursuant to another section of the Act: s 254E which gives the court the power to...