The High Court has confirmed a special resolution allowing Jazz Pharmaceuticals plc to cancel the amount in its share premium account when the reduction takes effect, or a lesser amount determined by the company’s officers or the court. The ruling followed a hearing on 26 November 2020.
Mr Justice David Barniville delivered a written judgment on 1 December. He said he had already granted the requested orders at the end of the hearing in an ex tempore judgment, and later set out his reasons, including for a jurisdictional issue that had not previously been considered in Ireland.
Shareholders passed the special resolution on 30 July 2020. At that time, the account held US$894,659,000. Continued share issues following the exercise of options increased it to US$951,152,875 by the hearing, a rise of US$56,493,875. The company sought confirmation for cancelling the balance at the effective date, so the proposed reduction exceeded the account balance when shareholders approved the resolution.
The judge ruled that the increase did not prevent the court from confirming the resolution. He said the relevant time for assessing the capital was when the court was asked to confirm the reduction. He also noted that a significant delay or other material intervening events could lead a court to refuse confirmation and require a fresh resolution. In this case, there had been no significant delay and no other material event was identified.
The company said the reduction would turn the reserve created by cancellation into profits available for distribution, giving its board flexibility to repurchase or redeem shares or pay dividends. Its evidence said it did not then plan cash dividends in the foreseeable future but had an ongoing share repurchase programme.
The judge was satisfied that the company had met the statutory notice requirements and that the reduction did not involve reducing liability for unpaid capital or repaying paid-up capital to shareholders. He found that no creditor could credibly demonstrate likely prejudice, and no creditor objected. He also accepted that the company had shown a discernible purpose, treated shareholders equitably and safeguarded creditors.
The court confirmed the resolution under section 85(1) of the Companies Act 2014 and made the ancillary orders sought. The judgment says the reduction takes effect when the Registrar of Companies registers the court order and approved minute.