Quoram for the meeting of the preferance shareholders
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
08 June 2010
In our company we have 2 Preference shareholders one is holding preference share capital of Rs.5 crore and another Rs.3 crore.
now we want to vary the rights attached to these preference shares for which we need to hold the meeting of the prefence shareholders and pass the special resolution.
my question is that what will be the quoram for the meeting since there are only 2 preference shareholders and in case only one shareholder present in the meeting & votes in favour of the resolution whether it will binding on the other preference shareholder as well.
now we want to vary the rights attached to these preference shares for which we need to hold the meeting of the prefence shareholders and pass the special resolution.
my question is that what will be the quoram for the meeting since there are only 2 preference shareholders and in case only one shareholder present in the meeting & votes in favour of the resolution whether it will binding on the other preference shareholder as well.
Querist : Anonymous
Querist :
Anonymous
(Querist)
08 June 2010
In our company we have 2 Preference shareholders one is holding preference share capital of Rs.5 crore and another Rs.3 crore.
now we want to vary the rights attached to these preference shares for which we need to hold the meeting of the prefence shareholders and pass the special resolution.
my question is that what will be the quoram for the meeting since there are only 2 preference shareholders and in case only one shareholder present in the meeting & votes in favour of the resolution whether it will binding on the other preference shareholder as well.
now we want to vary the rights attached to these preference shares for which we need to hold the meeting of the prefence shareholders and pass the special resolution.
my question is that what will be the quoram for the meeting since there are only 2 preference shareholders and in case only one shareholder present in the meeting & votes in favour of the resolution whether it will binding on the other preference shareholder as well.
19 July 2025
1. Quorum for the Meeting of Preference Shareholders
Since there are only 2 preference shareholders, the quorum will depend on your company's Articles of Association (AoA) or the applicable law.
Under the Companies Act, 1956 (Section 171(5)), the quorum for a class meeting is the lower of:
Two members personally present, or
One-third of the total members of that class.
In your case:
1/3 of 2 = 0.66, rounded up to 1 member,
So the quorum is 1 preference shareholder present.
Therefore, the meeting can be held if at least 1 preference shareholder attends.
2. Is a Resolution Passed by One Shareholder Binding on the Other?
The rights attached to preference shares can only be varied by a special resolution passed by the class of preference shareholders.
A special resolution requires at least 75% approval (by value of shares).
If the single shareholder present holds 75% or more of the preference shares (Rs.5 crore out of Rs.8 crore = 62.5%, Rs.3 crore = 37.5%):
The shareholder holding Rs.5 crore has 62.5% votes, which is less than 75%.
So, one shareholder alone cannot pass a binding special resolution unless they hold 75% or more.
If the shareholder holding Rs.5 crore attends and votes in favor:
The special resolution will NOT be passed because it doesn't meet the 75% threshold.
Thus, the resolution won't be binding on the other shareholder.
Since there are only 2 preference shareholders, the quorum will depend on your company's Articles of Association (AoA) or the applicable law.
Under the Companies Act, 1956 (Section 171(5)), the quorum for a class meeting is the lower of:
Two members personally present, or
One-third of the total members of that class.
In your case:
1/3 of 2 = 0.66, rounded up to 1 member,
So the quorum is 1 preference shareholder present.
Therefore, the meeting can be held if at least 1 preference shareholder attends.
2. Is a Resolution Passed by One Shareholder Binding on the Other?
The rights attached to preference shares can only be varied by a special resolution passed by the class of preference shareholders.
A special resolution requires at least 75% approval (by value of shares).
If the single shareholder present holds 75% or more of the preference shares (Rs.5 crore out of Rs.8 crore = 62.5%, Rs.3 crore = 37.5%):
The shareholder holding Rs.5 crore has 62.5% votes, which is less than 75%.
So, one shareholder alone cannot pass a binding special resolution unless they hold 75% or more.
If the shareholder holding Rs.5 crore attends and votes in favor:
The special resolution will NOT be passed because it doesn't meet the 75% threshold.
Thus, the resolution won't be binding on the other shareholder.
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