The passing of laws to nationalise Anglo Irish Bank this week revealed some more details on how and when compensation for Anglo Irish shareholders, whose equity has been wiped out, will be determined.
An assessor is to be appointed by the Minister for Finance, who will determine a "fair and reasonable value" of the shares transferred to the Minister.
The value will be determined as of the January 15 and will be based on the "true financial state" of the bank, taking into account the underlying market value of its assets and the "extent of its actual, contingent, and prospective liabilities at that date", assuming no additional financial assistance, other than the Government guarantee already provided.
Reference is to be made to: (i ) the quoted price of the shares on close of business on January 15, any relevant information about the business on that date, whether publicly available or not and; (ii ) whether Anglo, on that date was "unable or likely to become unable to continue as a going concern in the short, medium, or long term, or that there was a material risk of its not being able to do so".
The assessor can accept submissions from a number of parties regarding the value of the transferred shares and "extinguished rights", including the Central Bank, the Governor; a person appointed by the assessor to represent holders of a particular class of shares; the Minister for Finance (and if he requires the National Treasury Management Agency ) and; any other person the assessor invites to make a submission.
Once the Assessor's report has been finalised and agreed, it will go to the Minister who will make a compensation scheme within one month (or in the event of a judicial review - within one month of its conclusion ).
The assessor's determination of compensation can be appealed to the Irish Financial Services Appeals Tribunal, with a successful appeal required to establish "as a matter of probability" that there was a "serious error" in the Assessor's determination.
A judicial review to the High Court will only be granted if it regards a "substantial issue" and the application is made within one month of the assessor's report to the Minister (or longer if there is a substantial reason why an application was not made within one month ). It looks like if there is to be compensation for Anglo Irish shareholders, it has the potential to be quite a lengthy process to actual payment.
