Governa Ltd. is a company with two classes of equity shareholders: Class A (founders and promoters) and Class B (public investors). Both classes initially held equal voting rights and dividend entitlements. However, the

Securities with Differential Rights: Section 48 of the Companies Act, 2013 deals with the variation of shareholders' rights. This section deals with the procedure involved, when a company intends to vary rights attached with any class of shareholders. The features are as follows: Approval of class of shareholders: The rights attached to the shares of any class may be varied with the consent in writing of the holders of not less than three-fourths of the issued shares of that class or by means of a special resolution passed at a separate meeting of the holders of the issued shares of that class— if provision with respect to such variation is contained in the memorandum or articles of the company; or in the absence of any such provision in the memorandum or articles, if such variation is not prohibited by the terms of issue of the shares of that class. Impact on rights of other class: The section provides that if variation by one class of shareholders affects the rights of any other class of shareholders, the consent of three-fourths of such other class of shareholders shall also be obtained and the provisions of this section shall apply to such variation. Cancellation of variation: Variation may be cancelled if, holders of not less than ten per cent of the issued shares of a class did not consent to such variation or vote in favour of the special resolution for the variation. They may apply to the Tribunal to cancel the variation, and where any such application is made, the variation shall not have effect unless and until it is confirmed by the Tribunal. It is provided that an application under this section shall be made within twenty-one days after the date on which the consent was given or the resolution was passed, as the case may be, and may be made on behalf of the shareholders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose. The decision of the Tribunal on any such application shall be binding on the shareholders. The company shall, within thirty days of the date of the order of the Tribunal, file a copy thereof with the Registrar. In the given case, the variation of rights of Class B shareholders (reducing voting power and prioritizing dividend payouts to Class A) would require the consent of not less than three-fourths of the holders of Class B shares. Additionally, since this variation affects the rights of Class B shareholders, and potentially benefits Class A shareholders, the consent of three-fourths of Class A shareholders might also be required if their rights are deemed to be affected. The minority Class B shareholders (12% equity) can challenge this move by applying to the Tribunal to cancel the variation within twenty-one days if they did not consent or vote in favor of the special resolution.