The High Court has refused an application to prevent Permanent TSB Group Holdings from requiring director Piotr Skoczylas to retire at its next annual general meeting, while a shareholder oppression case continues.
Mr Justice Gilligan ruled on 27 March 2013 that the requested injunction was not justified. Skoczylas could put himself forward for re-election at the AGM scheduled for 22 May 2013, the court said, and it could not predict whether shareholders would re-elect him. The court also refused the petitioners’ request for a preliminary reference to the Court of Justice of the European Union, finding that it was premature before the substantive trial.
The application was an interim step in proceedings under section 205 of the Companies Act 1963. The petitioners sought to stop the respondent directors from acting on the company’s articles, which require directors to retire by rotation, until the main case was decided. The court applied the “fair issue” standard for interlocutory relief, rather than the higher “strong case” standard argued for by the respondents.
Skoczylas was elected to the holding company’s board in July 2011, subject to regulatory approval, and the Central Bank approved his appointment in December that year. He took up the directorship from 4 April 2012. The petitioners alleged he had been marginalised, denied adequate information and prevented from fully carrying out his duties. The respondents disputed the basis for the injunction and argued that the articles required the longest-serving director to retire, while Skoczylas remained eligible to stand again.
The court accepted that it had jurisdiction to restrain a director’s removal while a section 205 case was pending, but distinguished an earlier case involving a determined attempt to remove directors. It found no evidence that the board had prevented Skoczylas from standing for re-election. The court also noted that no agreement existed between him and minority shareholders comparable to one considered in the earlier case, and said the voting rights of the company’s other shareholders had to be respected.
The judge said there was a serious issue to be tried in the wider section 205 proceedings and regarding a possible EU law reference at trial. However, he found no serious issue for interim relief concerning Skoczylas’s current position as a director. Suspending the company’s articles would leave it in breach of its own rules, and the balance of convenience favoured compliance with them. The court concluded that relief available in the main proceedings would provide adequate protection and refused the injunction.
The ruling concerns only the interlocutory application. It does not determine the allegations in the main section 205 case, and Skoczylas could seek re-election at the AGM.