The Court held that A class shares in the company's constitution were not redeemable preference shares, notwithstanding a general power in the constitution permitting the board to redeem any member's share upon insolvency or deregistration; the constitution's express delineation of redeemable preference shares with specific attributes (including limited voting rights) precluded treating ordinary shares with full voting rights as redeemable. The purported redemption therefore constituted a reduction of share capital subject to s 256B of the Corporations Act, with which the company had not complied. However, the Court held that s 256D of the Act validates all capital reductions made in contravention of s 256B(1), not merely those involving procedural irregularities, meaning the reduction was valid notwithstanding the complete absence of shareholder approval, with the consequence that remedies lie only against persons involved in the contravention via civil penalty provisions.
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