Grudge Ltd has its ordinary and preference shares quoted for trading on the Australian Securities Exchange. The company has 100 million fully paid up ordinary shares on issue. It also has 60 million fully paid up preference shares on issue. These shares can only be voted at a general meeting in the circumstances referred to in the definition of ‘voting share’ in s 9 of the Corporations Act.
The company’s constitution provides that the company’s power to issue bonus shares may be exercised by the company in general meeting. The constitution also has a variation of class rights clause which requires a variation of class rights to be approved by:
(i) A special resolution of a general meeting; and
(ii) A special resolution passed at a meeting of the class of shareholders whose rights are to be altered.
A general meeting has been convened to pass the following resolutions:
(a) That the company immediately issue to ordinary shareholders one bonus ordinary share for each ordinary share currently held, on the basis that the voting rights attached to the bonus shares may be exercised immediately the resolution is passed.
(b) The variation of class rights clause be amended by deleting the requirement that a variation of class rights has to be approved by a special resolution of the class of shareholders whose rights are to be altered.
A preference shareholder has sought your advice in relation to the following matters:
(i) Can the preference shares be voted on the resolution of the general meeting to issue bonus shares to the ordinary shareholders?
(ii) Will the issue of the bonus shares have to be approved by the preference shareholders at a separate class meeting?
(iii) Can the preference shareholders vote at the general meeting on the proposal to amend the variation of rights clause?
(iv) Will the amendment of the variation of rights clause also have to be approved by the preference shareholders at a separate class meeting?