Wednesday 22 November 2017

Shareholder meeting not needed for €4bn IL&P recap

Piotr Skoczylas of Scotchstone Capital
Piotr Skoczylas of Scotchstone Capital
John Mulligan

John Mulligan

The government was entitled to push through its €4bn recapitalisation of Irish Life & Permanent without calling a general meeting of the bank's shareholders, an advocate for the European Court of Justice has determined.

The advocate's opinion - almost certain to be adopted by the Luxembourg court - all but ends a legal battle by a group of disaffected shareholders who claimed their rights were violated when the government took control of the lender at the height of the financial crisis.

A group of shareholders, including a former non-executive director of the group, Piotr Skoczylas, sought to prevent the 2011 recapitalisation, arguing that the government did not have the power under emergency banking laws to freeze out existing shareholders from the plan.

But an advocate general at the European Court of Justice - Nils Wahl - said yesterday that he was "unable to see" how there might have been any interference in the shareholders' right to property.

He affirmed that the courts of member states can order that public limited companies which are of systemic importance to the economy of that state and which cannot meet regulatory requirements, be taken over by the government without the need for a general meeting of that company's shareholders.

Mr Wahl said that current EU provisions under a company law directive do not preclude individual member state legislation that is used to address disruption to the economy and the financial system, "and the threat to the stability of certain credit institutions in that member state and the financial system generally, as well as minimising the risk of spread to other member states".

However, Mr Wahl has said that member states must ensure that such courses of action are undertaken to have the "least detrimental" impact on the EU company law directive.

Mr Wahl's opinion is not a ruling, but advocates' opinions are almost always accepted by ECJ judges. Mr Skoczylas is the managing director of Malta-based Scotchstone Capital. He was added in 2011 to a High Court action taken by other IL&P shareholders against Finance Minister Michael Noonan, in an effort to reverse the first, €2.7bn phase of a government recapitalisation of the lender that summer.

In 2012, Irish Life was sold to the State for €1.3bn, completing the €4bn recap. In 2014, the High Court judge hearing the case referred it to the European Court of Justice.

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