The High Court refused Ryanair Limited’s application to compel Aer Lingus Group plc to put two proposed resolutions before its 2011 annual general meeting, finding that neither could be adopted by ordinary shareholder resolution under the company’s articles of association.
Justice Brian J. McGovern delivered the judgment on 15 April 2011. Ryanair held 29.82% of Aer Lingus’s issued share capital, above the 3% threshold cited in section 133B of the Companies Act 1963. It asked the company to table resolutions at the AGM scheduled for 6 May 2011.
The first proposed resolution called for a €30 million dividend for the year ended 31 December 2010. It referred to the company’s cash reserves and payments connected with its 2009 Greenfield Programme. The second proposed that further payments to the Employee Share Ownership Trust or company pension schemes above existing defined contribution rates require prior shareholder approval.
Aer Lingus refused to table the resolutions. It argued that its articles assigned the relevant decisions to the board and that the proposed resolutions could not lawfully be implemented. Ryanair argued that section 133B gave a qualifying shareholder the right to table resolutions. These were the parties’ submissions; the court’s decision turned on the limits imposed by the company’s articles.
On the dividend proposal, the court treated the directors’ statement that they did not propose a dividend as a recommendation to shareholders that none be paid. Article 111 provided that a dividend declared by ordinary resolution could not exceed the amount recommended by the directors. Because the recommendation was for no dividend, the proposed €30 million payment would exceed that limit. The court held Aer Lingus was entitled to refuse to put that resolution before the AGM.
The court also accepted Aer Lingus’s objection to the pension proposal. It described the wording as unsatisfactory and apparently aspirational, then found a more fundamental problem: the articles gave the directors power to decide what pension benefits and payments the company would provide. Shareholders could not use an ordinary resolution to override or restrict that power. The court noted that the general meeting might act if directors could not or would not exercise a power vested in them, but found that had not occurred here.
The judgment refused the reliefs Ryanair sought. It did not order either resolution to be tabled or decide that the AGM could not proceed without them.