Shares designated as preference shares in a company's articles of association may be validly issued and redeemed as redeemable preference shares even where no ordinary shares have ever been issued, provided the articles confer appropriate preferential rights. The rights described in the articles determine whether shares are preferential; the meaning of articles cannot be affected by the state of the share register. There is a distinction between the rights attached to a share and the enjoyment of those rights — preferential rights may be potential only, without effective content, until ordinary shares are issued. Re Capel Finance Ltd [2005] NSWSC 286 is confined to cases where the articles confer no priority rights at all on the relevant shares.
The full text is available to signed-in members, including the 9 later cases that cite this judgment.
1 of the 9 citing cases carry a classified treatment. How each court treated it is available to signed-in members.