Website for Shareholders in Permanent TSB Group Holdings plc
Dear Shareholder in Permanent TSB Group Holdings plc ("PTSB GH" or "PTSB Holdings"),
This website has been created for the shareholders in Irish Life & Permanent Group Holdings plc (currently PTSB Holdings), who collectively had represented 100% of the company's voting share capital before the ex parte direction order effected by the Minister for Finance (the "Minister") on 26 July 2011 (the "July 2011 Ex Parte Provisional Direction Order"). The said Ex Parte Direction Order reduced forcibly the stake of the original shareholders to less than 0.8% for the benefit of the Minister. The Irish Minister for Finance, Michael Noonan, committed egregious breaches of the most fundamental provisions of the EU Second Council Directive (77/91/EEC) in conjunction with his illegal takeover of more than 99% of capital in PTSB Holdings, robbing the original shareholders of €432 million (i.e. more than €1.56 per share), in addition to causing other financial and non-financial harms.
The tragedy of the case is that PTSB Holdings is unique because its shareholder base has been always extremely fragmented, with no shareholder ever holding more than a very small stake in the Company. Therefore, there are 135,000 small individual shareholders worldwide (including more than 100,000 in Ireland), many of whom are pensioners and former employees of PTSB Bank. As a result of the Minister's illegal actions, a large number of small shareholders lost their livelihoods.
Breaching EU law is illegal. EU law has primacy over national laws of EU Member States. Consequently, the Irish High Court has been unable to uphold the legality of the Minister’s actions and referred the matter to the European Court of Justice, where it will be ruled upon under the record number C-41/15 (Dowling and Others v. Ireland). The crux of the matter is the fact that the Minister effected an increase in capital in PTSB Holdings by way of a so-called ex parte direction order (i.e. a ministerial decision that was practically automatically endorsed by the court without a possibility for the affected parties to object at the time of the court's endorsement). The Minister effected the said ex parte direction order in a manner incompatible with the following provisions of the Second Council Directive:
1. The Minister breached Article 25(1) of the Directive, because the said Direction Order forced an increase in the capital in PTSB Holdings, against the respective decision of an EGM, by an issuance to the Minister of more than 36 billion (!!!) new shares, causing a massive dilution to the existing shareholders; and
2. The Minister breached Article 29(1) of the Directive, because the said Direction Order deprived the shareholders in PTSB Holdings, against the respective decision of the EGM, of their pre-emption rights, as the existing shareholders were not offered shares on a pre-emptive basis in proportion to the capital represented by their shares; and
3. The Minister breached Article 8(1) of the Directive, because the above-mentioned direction order changed, against the respective decisions of the EGM, the Memorandum and Articles of Association (i.e. the Constitution) of PTSB Holdings and reduced the legally fixed nominal value of the share from 32 cents to 3.1 cents in order to enable the Minister to immediately subscribe for new shares at 6.345 cents (i.e. below the original nominal value of 32 cents).
It is important to note that challenging the Minister's illegal takeover of PTSB Holdings does not mean challenging the recapitalisation (i.e. the legally required increase of the capital buffer) of PTSB Bank, which is a bank wholly-owned by PTSB Holdings. PTSB Holdings and PTSB Bank are two separate entities with separate capital and separate Boards. PTSB Holdings has 135,000 shareholders worldwide and PTSB Bank is not a listed company. The recapitalisation of the PTSB Bank should have - and could have - been effected in a manner compatible with EU law. In particular, there was no legitimate reason to funnel through PTSB Holdings the funds to recapitalise PTSB Bank, against the respective decision of the EGM of PTSB Holdings. Furthermore, there was no legitimate reason to abrogate mandatory pre-emption rights of the shareholders in PTSB Holdings or to lower the nominal value of the PTSB Holdings share, against the respective decisions of the EGM. There has never been any obligation under EU law to effect those measures the way the Minister did it, i.e. in a manner incompatible with EU law. There was no reason whatsoever for the Minister to appropriate more than 99% of the separate capital of PTSB Holdings, i.e. €432 million (attributable in whole to the original shareholders), which was not even used for the recapitalisation of PTSB Bank and which is now unlawfully attributable to the Minister.
The comprehensive case law of the Court of Justice of the European Union (the “CJEU”) and the relevant documents issued by the European Commission make it clear that the Minister acted illegally. The relevant CJEU case law comprises seven consistent rulings of the CJEU between May 1991 and December 2008. The Irish Minister for Finance has not offered at any point any CJEU case law whatsoever that would support the notion that the comprehensive and consistent CJEU jurisprudence on the Second Council Directive could be disregarded by the Minister in July 2011, allowing the Minister to commit the egregious breaches of EU law when he effected the said Ex Parte Direction Order.
As you may know, a small group of shareholders in PTSB Holdings (the "Shareholder Litigants"), led by Piotr Skoczylas of Scotchstone Capital Fund Ltd, has been fighting the Minister / the Irish State in courts regarding, inter alia, the Minister's aforementioned takeover of the 99.2% of the PTSB Holdings paid-in capital. The court proceedings against the Minister are still ongoing. However, the Shareholder Litigants have already achieved certain important milestones, including, among others, the following:
Firstly, following the latest three-week hearing in January and February 2014, the Irish High Court has been unable to uphold the legality of the July 2011 Ex Parte Provisional Direction Order. On 12 November 2014, the High Court ordered that the Court of Justice of the European Union (the "CJEU") be asked to interpret EU law and, in effect, determine legality of national measures such as the said ex parte provisional direction order. References to the CJEU are rare in Ireland. National courts must follow the CJEU rulings. Consequently, the said ex parte provisional Direction Order of July 2011 will be set aside or varied, if the CJEU rules against the Minister's position.
Secondly, the Irish High Court has recently delivered a ruling (subject to an appeal), the consequence of which is that, should the July 2011 Ex Parte Provisional Direction Order be determined to be illegal due to its incompatibility with EU law, then the shareholders in PTSB Holdings who were affected by the illegality of that direction order may be able to apply for damages. Thus, should you have been affected by the July 2011 Ex Parte Provisional Direction Order, you may be eligible for damages. Specifically, as outlined in more detail on this website, the current state of litigation against the Minister opened a way for the affected shareholders in PTSB Holdings to potentially claim in due course damages estimated to be at least €1.8 per share (excluding non-calculable damages and interest / re-investment losses). Please note that if you were a shareholder in PTSB Holdings on 26 July 2011, you then have been affected by the said ex parte direction order and, therefore, may be eligible to apply for the potential damages, even if you sold your shares subsequent to that date. On that basis, you can work out yourself damages that would be potentially awarded to you (if you have been affected by the said ex parte direction order). Assuming that all the affected 135,000 shareholders in PTSB Holdings (mostly from Ireland) joined the respective legal action, and assuming that such a legal action is successful, the total damages attributable to all the affected shareholders would then potentially amount to at least €500 million (excluding non-calculable damages and interest / re-investment losses).
The following letters have been sent to the largest affected shareholders in PTSB Holdings:
- Letter dated 7 January 2015 to the largest 200 affected shareholders
- Letter dated 22 January 2015 to the largest 10,000 affected shareholders
In the above context, this website describes briefly (and non-exhaustively) selected key aspects of the legal proceedings against the Minister, which may be relevant for you.
It is critically important that the affected shareholders in PTSB Holdings close ranks. The more united the shareholders are, the more effective they can jointly be in influencing the current situation. All the shareholders may benefit from extending a shareholder coalition of common interest. Please let us know if, following the pending ruling of the Court of Justice of the European Union, you would be interested in seeking the aforementioned potential damages (assuming, inter alia, that the Court of Justice of the European Union rules in favour of the position of the affected shareholders in PTSB Holdings). Please provide your feedback via the feedback form available at "Your Feedback" tab. Additionally, please do not hesitate to contact us if you have any questions.
The information provided on this website is provided for general information purposes and/or as a general commentary only, and does not constitute a legal or professional advice or an offer or solicitation of any sort. By providing your feedback, you would be expressing your views, which will contribute towards extending a shareholder coalition of common interest.
By using this website, you acknowledge your assent without any limitation or qualification to the information and conditions of use, which are provided in the "Disclaimer" at the bottom of each of the web pages on this website . Please read the Disclaimer carefully.
Certain matters related to the court proceedings against the Irish Minister for Finance continue to be subject to further court proceedings. In addition to proceedings regarding the setting aside of the July 2011 Ex Parte Provisional Direction Order, there are also proceedings regarding the appropriation and then re-sale by the Minister of Irish Life, which used to be a (very profitable) insurance arm of PTSB Holdings, as well as proceedings against selected directors of PTSB Holdings, who, in following the Minister's directions without sufficient legal scrutiny legally required of them, are alleged to have acted unlawfully and committed violations, some of which are classified under the Irish law as indictable offences punishable by a significant fine and/or, at the discretion of the court, by up to 5 years of imprisonment. Nothing in this website should be misconstrued as prejudicing or contradicting the position of the Shareholder Litigants in any court proceedings.
Flynn & O’Donnell Solicitors
10 Anglesea Street
Dublin 2, Ireland