Rights attached to a class of shares can only be changed in the way the articles allow or, if the articles say nothing, with the written consent of holders of three quarters in nominal value of that class or a special resolution passed at a separate meeting of the class (section 630 of the Companies Act 2006). Holders of at least 15% of the class who did not agree can then ask the court, within 21 days, to cancel the change, and the variation has no effect until the court confirms it.

What counts as a class right, and what counts as varying it?

Section 629 says shares are of one class if the rights attached to them are in all respects uniform. Class rights are what make a class different, such as a preferential dividend, priority on a return of capital, voting status or redemption terms; see different classes of shares.

The Act says surprisingly little about what a variation is. It does say two things clearly:

  • Abrogation is a variation. Removing a right altogether counts (section 630(6)).
  • Changing the variation clause is a variation. Amending a provision in the articles for varying class rights, or inserting one where there was none, is itself treated as a variation of those rights (section 630(5)).

Because the statutory wording is narrow, investor style articles usually add a list of actions that are treated as a variation of a class, such as creating a new class ranking ahead of it, changing the articles, paying a dividend on another class or altering the share capital. Section 630(2)(a) lets the articles set the procedure, and section 630(3) preserves other restrictions.

Rights that sit only in a shareholders’ agreement, such as an investor’s veto, are contractual rather than class rights. They are changed in whatever way that agreement provides, not under section 630.

Do you follow the articles or section 630?

Section 630(2) gives a strict order. If the articles contain a provision for varying the rights of the class, the variation must follow it. Only if the articles contain no such provision does the statutory consent in section 630(4) apply. The model articles for private companies contain no class rights variation clause, so a company using them, or articles based on them, falls back on the statutory test.

Class consent is in addition to, not instead of, whatever else the change requires. Most variations involve amending the articles, which needs a special resolution of the members as a whole under section 21. A special resolution needs a majority of not less than 75% under section 283, and a written special resolution of a private company needs members holding at least 75% of the total voting rights of eligible members. So a typical variation needs two separate approvals: one from the members generally and one from the affected class.

If the articles entrench a provision under section 22, the more restrictive conditions set by the entrenchment also apply. Entrenchment can only be put in the articles on formation or by an amendment agreed by all the members, and it never prevents an amendment agreed by all the members or ordered by a court.

How is the class consent actually obtained?

Section 630(4) offers two methods.

Written consent

Consent in writing from the holders of at least three quarters in nominal value of the issued shares of the class, excluding treasury shares. The test is nominal value, not the number of holders and not voting rights, so holders of a non voting class still decide variations of their own class.

A separate class meeting

A special resolution passed at a separate general meeting of the holders of the class. Section 334 applies the general meeting rules to class meetings with modifications, which brings in the minimum notice period of 14 days for a meeting of a private company under section 307. For a meeting about a variation of class rights, section 334 sets its own rules:

  • the quorum is two persons present holding at least one third in nominal value of the issued shares of the class, excluding treasury shares;
  • at an adjourned meeting, one person present holding shares of the class is a quorum;
  • a proxy counts only for the shares the proxy is authorised to vote; and
  • any holder of shares of the class who is present may demand a poll.

Can holders who disagree stop the change?

Section 633 gives dissenting holders a specific objection right:

  • holders of not less than 15% in aggregate of the issued shares of the class, who did not consent to or vote for the variation, may apply to court to have it cancelled (treasury shares are disregarded);
  • the application must be made within 21 days after the consent was given or the resolution passed;
  • it can be brought by one or more of them appointed in writing on behalf of the rest;
  • once an application is made, the variation has no effect unless and until the court confirms it; and
  • the court disallows the variation only if satisfied that it would unfairly prejudice the shareholders of the class represented by the applicant, otherwise it must confirm it, and its decision is final.

If the court makes an order, the company must send a copy to Companies House within 15 days (section 635).

Section 632 confirms that the class rights rules do not displace the court’s powers under Part 30, the unfair prejudice regime. Any member, whatever the size of their holding and without the 21 day limit, can petition under section 994 if the company’s affairs are conducted in a way that is unfairly prejudicial to their interests. Under section 996 the court can make any order it thinks fit, including ordering the purchase of the petitioner’s shares. The wider picture is covered in protection for minority shareholders.

What has to be filed at Companies House?

Document Rule Deadline
Form SH10, particulars of the variation Section 637 Within one month of the variation
Copy of the class resolution or written consent Sections 29 and 30 Within 15 days
Special resolution amending the articles Sections 29 and 30 Within 15 days
Amended articles Section 26 Within 15 days of the amendment taking effect
Form SH08, if the class is given a new name Section 636 Within one month
Copy of any court order on an objection Section 635 Within 15 days

The class consent has to be filed because section 29(1)(d) covers any resolution or agreement that binds all members of a class even though not all of them agreed to it. Failing to deliver an SH10 is an offence by the company and every officer in default, with a fine up to level 3 on the standard scale and a daily default fine for continued failure. Where the variation is part of converting existing shares into a new class, see converting or redesignating share classes.

How does this work in practice?

Illustration only. A company has 9,000 ordinary shares and 1,000 preference shares of £1 each. The preference shares carry a fixed cumulative dividend and are held by P (600), Q (250) and R (150). The board wants to make the preference dividend non cumulative. The articles are based on the model articles with the preference rights added, and contain no variation clause.

  1. The ordinary shareholders pass a special resolution amending the articles.
  2. Statutory class consent needs written consent from holders of at least 750 preference shares by nominal value. P and Q sign, giving 850, so the consent is effective.
  3. R did not sign and holds exactly 15% of the class, so R can apply to court within 21 days. If R applies, the change has no effect until the court confirms it.
  4. If R does not apply, the company files the resolution and the class consent within 15 days, the amended articles within 15 days, and the SH10 within one month.

Had R held 140 shares (14%), R could not use section 633 alone, but could still petition under section 994 if the change was unfairly prejudicial.

How can investors protect their class rights from the start?

  • A variation clause with a deemed variations list, so that the actions that hurt the class most, such as issuing senior shares, need the class’s consent.
  • Contractual consent rights in the investment or shareholders’ agreement, which give a personal veto but do not bind future holders who never signed.
  • Entrenchment under section 22 for the provisions that must not change without unanimous agreement.

What mistakes come up most often?

  • Relying on the general meeting. A founder with 80% of the votes can pass the special resolution, but if the affected class is held by others, the variation fails without their consent.
  • Counting the wrong thing. The thresholds are by nominal value of the class, excluding treasury shares, not by heads or by votes.
  • An inquorate class meeting. The one third quorum for a variation meeting is stricter than the usual quorum for general meetings.
  • Acting inside the 21 days. Paying dividends or issuing shares on the new terms before the objection window closes risks unwinding them if an application is made.
  • Missing the SH10. The public register will not show the new rights, which causes problems on a later sale or funding round.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.