38

SECRETARIAL PRACTICE
this section must be made within seven days after the consent
was given or the resolution passed. The Court must confirm
the variation unless it is satisfied that having regard to all
the circumstances of the case the variation would unfairly
prejudice the shareholders of the class represented by the
applicant and there is no appeal from an order of the Court
under this section. A copy of any order of the Court under
this section must be forwarded by the company to the Regis-
trar of Companies within 15 days after the making of the
Order. The expression ‘variation’ in this section includes
‘abrogation.’ It will be noticed that the onus of proof is
on the dissentient minority.

Shares may be divided into any number of classes, e.g.
Preferred, Ordinary, ‘A’ Preference, ‘B’ Preference, and
so forth.

The preferential right is generally in respect of capital and
of dividend, but the right may be of any kind, e.g. in respect
of voting power. These rights are entirely separate, and the
possession, e.g. of preferential rights as to dividend, gives no
similar right in the distribution of capital [Simpson v. Palace
Theatre (1893), 69 L.T. 70].

Primd facie where a preferential dividend is provided for,
it is cumulative [Webb v. Earle (1875), 20 Eq. 556]; i.e. a
deficiency in one year can be paid out of the profits of a
subsequent year before the ordinary shareholders receive
anything; but if it is provided by the memorandum that the
holders of preference shares shall be entitled out of the net
profits of each year to a preferential dividend at a certain
rate, then such dividend is not cumulative [Staples v. Eastman
Photographic Materials Co. (1896), 2 Ch. 303; see also Adair
v. Old Bushmills (1908), W.N. 24].

Where capital is reduced, the presumption is that the loss
is to be borne as between classes of shareholders in the same
way as loss of capital, but the Court can sanction anv reduction
it thinks fair.

Special voting rights can be attached to different classes
of shares, and it has been held that these are alterable, when
given by the articles [re James Colmer (1897), 1 Ch. 524].

The question sometimes arises whether preference shares are
entitled in the absence of express provision to participate
in the distribution of surplus assets after all capital has been
repaid. In each case it is a question of construction of the
memorandum and articles. The authorities are difficult to
reconcile; the latest decision, in which all the authorities
are reviewed is in Collaroy Company v. Giffard (1928), Ch. 144.