Anglo Irish Bank was taken into public ownership under the Anglo Irish Bank Corporation Act 2009 (the “Act”) on 21 January 2009. The stated reason for this was that the funding position of the bank weakened and unacceptable practices that took place within it caused it serious reputational damage at a time when overall market sentiment towards it was negative.

 
The Act

 

The Act provides for the acquisition by the Minister for Finance (the “Minister”) of all of the shares (which includes warrants and stock) of Anglo Irish Bank Corporation public limited company (“Anglo”).  Those shares were acquired by the Minister free of all liabilities or any equitable or beneficial right, title or interest (including a security interest) but with all rights, benefits and privileges which, on or after 21 January 2009, attach or accrue to or arise from any such share.  The fact that the shares are to transfer free of liabilities and securities has obvious implications for any person who has previously loaned money to any existing shareholder of Anglo and secured such loan on or partially on shares in Anglo as this security is, in effect, extinguished.

 

 

Anglo is now a private company limited by shares under the name of "Anglo Irish Bank Corporation Limited".  Interestingly while Anglo may not make any call to the Minister to pay up any outstanding amounts due on any shares transferred to the Minister, the liability of any person who owned shares prior to 21 January 2009 to pay any amount in respect of such shares in unaffected.

 

 

Section 9 attempts to limit the effect that, amongst other things, the announcement by the Minister of his intention to enact the Act, the transfer of the shares to the Minister under the Act and the de-listing of Anglo will have on agreements, licences, security instruments, obligations or other instruments (“relevant instruments”) to which Anglo, any of its subsidiaries or subsidiary undertakings or any body corporate in which Anglo or any of its subsidiaries has any interest are a party or by which any of them are bound.  It provides that any provision in such a “relevant instrument” that would cause any of the consequences described in section 9(4) of the Act will be of no effect, except to the extent to which the Minister provides otherwise by order.  Some, but not all, of the consequences referred to in section 9(4) include:

  

   

This provision potentially involves the variation of a number of contracts and rights of parties under contracts and the implications of it will need to be carefully considered.  It also should be noted it applies retrospectively to any provision in such an instrument with effect from 14 January 2009.

 

It should also be noted that the Minister has the power to make an order, where he feels the cause or effect of failing to allow a provision in a relevant instrument to have effect and give rise to a consequence specified in section 9(4) of the Act, would, in all the circumstances, be unduly onerous, or cause undue unfairness or undue hardship, to give effect to such a provision to the extent specified in the order.

 

On 21 January 2009 the following rights were extinguished as against Anglo and the Minister:

 

    

On 21 January 2009 Anglo shares were dislisted.

 

  

The Minister (or his nominee) is given the power to remove the following persons from Anglo or any of its subsidiaries or subsidiary undertakings:

   

   

While any such removal will not deprive a person removed of any right to compensation or damages for the loss of office or appointment from a court the Act provides that:

   

  

This provision appears to give very extensive powers to the Minister to remove the persons listed above and to also limit greatly the remedies available to those persons if they successfully challenge their removal.

The Minister is required to appoint a person (an “Assessor”) to determine the fair and reasonable aggregate value of the shares transferred to the Minister and rights extinguished by the Act.  The Act sets out in detail the process and basis for valuation of the shares and extinguished rights.

  

When the Assessor has followed this process and determined the value of the shares acquired by the Minister and the extinguished rights, the Assessor is required to report to the Minister, amongst other things, the amount of compensation payable as fair and reasonable compensation and the categories of persons who the Assessor feels have a valid claim for payment of compensation.

    

If the Assessor has reported to the Minister that compensation is payable,  the Minister is required within one month following such report to make a scheme available providing procedures for:

   

   

It is possible to appeal to the Irish Financial Services Appeal Tribunal against the Assessor’s determination as to whether compensation is payable, the rejection of a person’s claim for compensation or the amount of compensation which is determined to be payable.