Friday 23 February 2018

Director at Permanent TSB holding firm not entitled to injunction, court rules

Aodhan O'Faolain and Ray Managh

THE High Court has ruled that a director of Permanent TSB's holding company is not entitled to an injunction that would prevent him from having to step down from his position.

Mr Piotr Skoczylas, and several other shareholders, sought an injunction preventing the other directors of Permanent TSB Group Holdings Plc and the Minister for Finance from terminating Mr Skoczylas's directorship of the holding company, which has 100pc of the share of Irish Life and Permanent - the bank.

Mr Skoczylas, who under company rules must retire as a director at its Annual General Meeting in May, and the other shareholders of the company wanted the injunction in place until their main case has been determined.

In those proceedings the shareholders have made a number of allegations including the holding companies' directors breached EU law and acted in an oppressive manner towards the holding company's shareholders during the sale of the bank's life assurance wing- Irish Life- to the Minister for Finance in 2012.

The other directors and the Minister deny the claims and had opposed the granting of the injunction.

In his ruling yesterday (Wednesday) Mr Justice Paul Gilligan refused to grant the injunction, which he held was misconceived. He said he did not find that there was a serious issue to be tried in relation to Mr Skoczylas's directorship.

The Court heard that under the companies rules, or articles of association, directors of PTSB Group Holdings must retire by rotation. At the company's AGM at least one third of the directors must retire, starting with with the longest serving director.

Mr Skoczylas, who was elected by shareholders to the board in July 2011, is the longest serving director. His appointment was confirmed in April 2012, while the other directors were all confirmed as directors the following May.  Directors who retire are not precluded from standing for re-election.

In seeking the injunction the shareholders claimed that Mr Skoczylas had not been validly appointed to the board as he was prevented from effectively discharging his duties as a director.

They argued that as Mr Skoczylas was elected to the board of the holding company he must also be appointed as a director of the bank. They claimed he was "illicitly blocked" from becoming a member of the bank's board.

One of the shareholders, Ms Muriel Scorer who was a director of ILP from 1994 to 2003, criticised both the Minister and the board for the manner Mr Skoczylas had been treated. She said his treatment "is an unprecedented abuse of power.... which flies in the face of the most fundamental governance."

Mr Skoczylas was constantly marginalised and deprived of the opportunity to adequately carry out his duties as a director, she said adding he was treated "very differently" to her when she was a director.  

The other directors and the Minister opposed the injunction application on grounds including that the directors are bound to the company's articles of association, which operate automatically, and that they had not acted in an oppressive manner as claimed. 

In his ruling Mr Justice Paul Gilligan said the balance of convenience "favoured compliance" with the company's rules in respect of director's retirement. The court was being asked to ignore the company's articles of association, which Mr Skoczylas had agreed to be bound.

Mr Skoczylas, the Judge said, was entitled to stand for re-election. There was no finding of fact that the board sought to preclude him from standing for re-election at the May 22nd AGM or that Mr Skoczylas will not be re-elected, the Judge added.

The Judge said he also accepted submissions from the Minister that the company rules compelling the directors to retire should not be set aside because of an internal dispute between the holding company and Mr Skoczylas.

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