The High Court has confirmed Hibernia REIT plc’s proposed €50 million reduction of its share premium account, allowing the resulting reserve to be treated as profits available for distribution. Mr Justice David Barniville also directed that the statutory creditor-objection procedure would not apply to any class of the company’s creditors and approved a revised minute of the reduction, among other ancillary orders.
The company had initially sought approval to reduce its share premium by up to €600 million. After legislative changes, its directors decided to seek approval for €50 million instead. The court found that the company had complied with the statutory requirements, including notifying creditors, and that the reduction had a discernible and bona fide purpose. It accepted evidence that the change would not affect the number of shares or shareholders’ proportionate interests, and that the company’s financial position was strong.
Richard Farrington opposed the application, claiming to be a creditor. He relied on an invoice sent to the company in January 2020 seeking more than €2 billion, including damages said to relate to Block 1, Clanwilliam Court, Dublin. Farrington also argued that the company’s accounts were improperly prepared and challenged its ownership of that property. Cormac Butler, presented on Farrington’s behalf as an expert, supported some of those objections.
The judge found that Farrington had not established a debt or other legal basis for a claim against the company. The company’s memorandum of association set out its objects but did not create a legal obligation to Farrington, who identified no separate contract with it. The judge concluded that Farrington was not a creditor. Alternatively, even if he were, he had not shown that the capital reduction was likely to put satisfaction of a claim at risk or that he qualified to object under the Companies Act 2014.
The court also rejected the objections concerning the accounts and the property. It accepted the company’s evidence that its accounts had been prepared in accordance with the relevant EU-adopted accounting standards, and found no evidence raising doubt about its ownership of Block 1. The judge said Butler’s evidence lacked a demonstrated relevant expertise and independence, and rejected it.
Farrington asked the court to refer an EU-law question to the Court of Justice of the European Union. The judge declined, finding no issue requiring the court’s guidance. The ruling confirms the reduction and ancillary relief; it does not determine the separate proceedings Farrington brought against other parties, or the pending application to join the company to those proceedings.