On 15 January, 2009, the Minister for Finance announced that Anglo Irish Bank Corporation plc (Anglo) is to be nationalised thereby abandoning its plan to recapitalise the bank by way of a €1.5 billion injection of funds. The draft legislation and its subject matter is unique in Ireland and will require close examination but a brief initial summary of the legislation is set out below. The bill is to come before the Oireachtas today, 20 January.
- Transfer of shares - The key sections of the Bill provide for the transfer of all shares in Anglo to the Minister for Finance with effect from the commencement of the Act and without the necessity of entering into any instrument transferring legal or beneficial title. On commencement of the Act, Anglo will become a private company limited by shares under the name of "Anglo Irish Bank Corporation Limited".
- Effect on certain other rights – The introduction of this Act and the subsequent transfer to the Minister of the shares in Anglo shall not trigger certain unintended consequences under any instrument to which Anglo or any of its group companies is a party such as (i) the creation of obligations, (ii) the suspension or extinction of obligations, (iii) amounts becoming due and payable by Anglo, and (iv) the causing of an event of default to arise.
- There are a host of technical provisions such as (i) the extinguishment of rights with respect to shares such as rights to subscribe, options over shares etc., (ii) the discontinuance of the bank's listing, (iii) the suspension and replacement of the bank's constitutional documents and (iv) disapplication of various legal provisions which could apply to the transfer of ownership including certain provisions of competition law, various company law provisions, provisions under banking and financial services law.
- Removal of directors of Anglo and appointment of new directors – The Minister may remove any director, employee, consultant, auditor or trustee of a pension fund or employee share scheme and may appoint any other person in that position. Any such person so removed would have a right to compensation in the ordinary course including under employment law provisions.
- No shadow or de facto directorship – The Minister, the Governor, any director of the Central Bank or Regulatory Authority, or any officers, consultants, advisors acting on their behalf, shall not be deemed to be a shadow director.
- The Assessor – An Assessor shall be appointed to determine the "fair and reasonable aggregate value of the transferred shares and the extinguished rights and the consequent amount of compensation, if any, payable to persons in respect of those shares and those rights". The Assessor is to be independent, is to act as an expert only and shall act as expeditiously as possible consistent with fairness.
The process of assessment by the Assessor will be as follows:
- The Central Bank, the Minister and any person whose shares are transferred or rights extinguished, among others, may make submissions to the Assessor.
- In arriving at a value, the value is to be taken as at 15 January 2009.
- The value is to be determined on the true financial state of Anglo, taking into account the underlying market values of the assets and the extent of its actual, contingent and prospective liabilities, having regard to the rights of each class of shares, taking into account the costs of the Minister and the Assessor and assuming no financial assistance, investment or guarantee by the State other than those already provided. There are a number of specified factors to which the Assessor shall have reference including the viability of the bank's business model, any access which Anglo has to ECB funding, whether Anglo was unable or unlikely as at 15 January to continue as a going concern and also, interestingly, any information not publicly known about Anglo, which, had it been known, would have been taken into account by any reasonable investor.
- Having arrived at a determination, the Assessor must make a report, circulated first in draft, to the Minister setting out his findings and including his reasons and the evidence supporting them. This report will be published.
- The Minister shall make any arrangements as are necessary for sufficient funds to be made available to enable any compensation to be paid.
- The Minister shall then make a scheme providing procedures for compensation within 3 months of being notified by the Assessor.
- The findings of the Assessor may be appealed to the Irish Financial Services Appeals Tribunal and the Bill sets out certain provisions which will apply to any such appeals procedure. The tribunal may refer a question of law to the High Court. There is also provision for judicial review of the Assessors determination by the High Court so long as the provisions of the Bill on such judicial review are followed.