The company has its own constitution (previously called the memorandum and articles of association). In the constitution it stated that the A class preference shareholders were entitled to a dividend of 6.5% each year. The directors would like to reduce this rate to 2.25% given the current financial position of the company and propose replacing the existing rule with a new rule reducing the dividend to 2.25%.

Issue they seek advice on:

1. Can the A class preference shareholders prevent the company from changing rule in the constitution to reduce the dividend rate?

Please use relevent case law and legislation from the corporations act 2001 austlii or asic act 2001 austlii

Your response must be supported by case law or legislation.

Conclusion in respect of each query raised by the client.