"Unilever is currently studying the decision," said Unilever secretary J van der Bijl. "We will fully cooperate withthe inquiry."

Unilever issued the preference shares in 1999 as a tax-friendly alternative to a cash dividend. In March 2004 the food giant published the proposed decision to convert these preference shares into ordinary Unilever shares in the first quarter of 2005.

However, a number of holders of these preference shares raised objections to this and asked the Enterprise Chamber to institute an inquiry. An additional request to forbid the conversion was rejected by the Enterprise Chamber.

Preference shares are non-equity shares. They rank ahead of all classes of ordinary shares for both income and capital. Their income rights are defined and they are usually entitled to a fixed dividend (eg. 10 per cent fixed).

The shares may be redeemable on fixed dates or they may be irredeemable. Sometimes they may be redeemable at a fixed premium (eg. at 120 per cent of cost). They may be convertible into a class of ordinary shares.

An informal summary of Unilever's defence can be found on the company's website .