White v Bristol Aeroplane Co [1953] Ch 65

Court: Court of Appeal

Facts: The company issued bonus shares, diluting the voting power of preference shareholders. These shareholders sought a separate class right meeting, arguing that the issuance amounted to a variation of their class rights.

Issue: Does the issuance of new shares that dilutes the voting power of a class of shareholders constitute a variation of class rights requiring a separate class meeting?

Held: The issuance of new shares did not amount to a variation of class rights.

Key Judicial Statement: Sir Raymond Evershed MR stated, "There is to my mind a distinction…between an affecting of the rights and an affecting of the enjoyment of the rights, or of the stockholders’ capacity to turn them to account."

💡 Leveluplaw: Dilution of voting power through new share issuance does not constitute a variation of class rights unless it changes the nature of the rights themselves.