The High Court confirmed Permanent TSB Group Holdings plc’s proposed cancellation and reduction of €1.49 billion from its share premium account, finding that the statutory and fairness requirements were met. Mr Justice Max Barrett gave written reasons on 28 July 2015, after indicating at a hearing on 22 July that the criteria were satisfied and making the required orders.
The company had asked the court to confirm a reduction of the share premium recorded when shareholders passed a resolution at the company’s annual general meeting on 8 April. The reduction was intended to reorganise the holding company’s balance sheet by offsetting historic losses. The court said the company’s negative reserves would fall from about €1.622 billion to approximately €132 million. The proposal did not eliminate the negative balance.
The company told the court that the reorganisation formed part of a wider capital-raising programme following European Central Bank stress testing and was important to attracting investors and allowing shareholders to participate in future profits. The court noted that 99.95% of votes cast at the AGM supported the resolution. It found the proposal had been explained to shareholders, served a discernible commercial purpose and treated shareholders equitably. It also concluded that creditors were safeguarded; the company’s liabilities were €3 million, owed to its subsidiary bank, as of 31 December 2014.
Three notice parties—Padraig McManus, Gerard Dowling and Piotr Skoczylas—opposed confirmation. Among other arguments, they disputed the validity of the Minister for Finance’s votes and claimed that earlier shareholders had personal rights to part of the share premium. The judge rejected those arguments, finding that the Minister’s shares and votes remained legally effective unless the relevant direction order was set aside. He also concluded that shareholders had no individual right to repayment of share premium absent a provision in the company’s articles.
The court held that a new Companies Act 2014 notice requirement did not invalidate this petition, which had been filed on 29 May 2015, before the relevant provisions came into force on 1 June. It also declined the notice parties’ proposal to set aside €364 million in a reserve pending the outcome of separate litigation.
The judge struck out the notice parties’ discovery application, noting that an earlier ruling had left any challenge to the directions for an appellate court and that no relevant factual dispute supported discovery. He refused the separate reliefs sought by two other applicants, finding on the balance of probabilities that their motions formed part of a coordinated effort to delay or prolong the hearing. The judgment confirmed the capital reduction and disposed of those applications; it did not determine the separate challenge to the Minister’s shareholding.