Re Saltdean Estate Co Ltd [1968]

Re Saltdean Estate Co Ltd [1968] 1 WLR 1844 concerned whether the buyback of shares through a reduction of capital constituted a variation of class rights, necessitating a separate class meeting under the company's articles. The primary contention was whether the pay off of preference shares, as part of a reduction of capital, required approval from the affected shareholders through a separate meeting.

The company's articles mandated a separate class meeting if the rights of a shareholder class were to be varied. Preference shareholders, whose shares were paid off at par through a reduction of capital, argued that a distinct meeting of preference shareholders was essential for approving the pay off.

The High Court held that no separate class meeting was required for the pay off of preference shares through a reduction of capital. Justice Buckley, in delivering the judgment, emphasised that the liability to prior repayment on a reduction of capital was inherent in the rights of preference shareholders. He stated, "Giving effect to it does not involve the variation or abrogation of any right attached to such a share." The integral nature of this liability in defining the bundle of rights associated with preference shares led to the conclusion that no variation of class rights occurred through the reduction of capital.

This case contributes to the jurisprudence on variations of class rights in company law, clarifying that actions integral to the pre-existing rights of a class, such as the payment of preference shares in a reduction of capital, may not constitute a variation requiring a separate meeting.

In conclusion, this case underscores the importance of examining the inherent rights associated with a class of shares in determining whether a transaction constitutes a variation. Justice Buckley's analysis provides clarity on the interplay between actions that give effect to existing rights and variations that alter the fundamental nature of those rights.
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