Reference no: EM133557375

Questions:

1. XYZ Ltd issued capital consists of 5 000 fully paid ordinary shares, which were issued at $ 2 when the company was formed in 2014, as well as 5000 fully paid 5% cumulative preference shares issued in 2018 at $5 each. The company has never declared dividends. In order to raise more capital, the board decides to issue a further 2000 cumulative preference shares. Advise the board on the following questions, citing relevant statutory and case law authority:

1) Would the issue of the further 2000 preference shares amount to a variation of class rights?

2) Are the preference shareholders entitled to demand the company to pay them a 5% dividend each year?

3) If a dividend is declared this year, would the preference shareholders be entitled to claim unpaid dividends for the years from 2018 to 2022?

4) If a dividend is declared this year, would the preference shareholders be entitled to participate along with ordinary shareholders in the payment of dividends after they have been paid their 5%?