74A. Conversion of shares

Question 1

74A. Conversion of shares

Answer 1

General overview
[74A.01] The new s 74A facilitates a capital reorganisation of a company by providing that a company whose share capital is divided into different classes may convert one class of shares into another.

Question 2

Conversion from one class to another

Answer 2

[74A.02] Subject to ss 64A and 75 of the Act, a company whose share capital is divided into different classes of shares may make provision in its constitution to authorise the conversion of one class of shares into another class. A capital reorganisation scheme (to convert deferred shares into ordinary shares) having been fully and properly explained to the shareholders without concealment of any relevant facts, and approved, on a poll being taken, by the requisite majorities of each class, was confirmed by the court

Question 3

Public company

Answer 3

[74A.03] A conversion of one class (A) to another class (B) is permitted only if the constitution of the public company permits B to be issued and sets out the rights attached to B.

Question 4

Variation of class rights

Answer 4

[74A.04] Where the conversion involves a variation or abrogation of rights attached to a class of shares, s 74 applies.

Question 5

Redeemable preference shares

Answer 5

[74A.05] A share that is not a redeemable preference share when issued cannot afterwards be converted into a redeemable preference share. This is to prevent s 70 being bypassed.